【TMGM Financial Recap】The Chinese And US Leaders Reach An Eight-Point Consensus, Leading To China-US Easing, But Hong Kong-Listed Chinese Concept Stocks Have Instead Declined

The economic and trade sector achieved the most specific results: both sides agreed to establish and advance mechanisms such as the Trade Council, reached a "$30 billion" reciprocal tariff reduction arrangement, and extended the results of the Kuala Lumpur trade negotiations. The head of the US Department at the Ministry of Commerce explained that both sides will reduce tariffs on about $30 billion worth of products imported from each other on a reciprocal basis, with tariffs on about 90% of each product lowered to the most-favored-nation rate, and Chinese coal imports from the US included in this framework. The consensus sent signals of stable expectations, but market reactions were mixed: US stocks closed higher last Friday, while Chinese concept stocks weakened alongside Hong Kong stocks. During the visit, a proposal to ban federal procurement of Chinese optical modules was proposed on September 25.

Among The Eight Points Of Consensus, Points Five And Seven Received The Most Market Attention

Article 5 on trade and economic cooperation: The two heads of state recognize the role of the China-U.S. economic and trade consultation mechanism and the results of the negotiations by their economic and trade teams, including establishing and advancing mechanisms such as the Trade Council, reaching a "$30 billion" reciprocal tax reduction arrangement, extending the results of the Kuala Lumpur economic and trade consultations, and instructing their implementation.

Article 7 concerns technology: Both sides agree to establish a China-US AI dialogue to exchange AI-related risks and benefits. The next dialogue will be held in November this year, while also establishing communication channels regarding AI incidents.

What truly adds novelty is that each of these two points has created a sustainable institution. The Ministry of Commerce's official provided a more detailed framework: the Trade Council is set up under the China-US Economic and Trade Consultation Mechanism, with the main task of optimizing bilateral trade. The economic and trade teams from both sides have reached consensus on tasks, structure, responsibilities, and consultation arrangements, which will be announced later; The Council will first discuss the "30 billion to 30 billion" reciprocal tax reduction framework, under which an agricultural working group has already been established. Both sides also agreed to establish a China-US Investment Council to conduct regular dialogues on potential investment opportunities and barriers, enhancing policy transparency and predictability while complying with the respective laws and regulatory requirements of both countries.

The significance of the mechanism lies in turning the negotiable content from the head's statements into a team checklist. Gao Fei, President of the Foreign Affairs University, interpreted that this meeting added the three qualifiers "respect, fairness, and equality" to the positioning of a "constructive strategic and stable relationship," consistent with China's previous three principles of mutual respect, peaceful coexistence, and win-win cooperation, setting a higher direction for China-U.S. relations.

Three Unresolved Issues

A commentary in Hong Kong's The Standard summarized the summit as a "moderate business gain": reciprocal tariff cuts on certain non-sensitive goods were the only concrete, measurable economic achievements, while the broader tariff truce was only a short-term extension, allowing the White House to retain tactical options after the midterm elections. The commentary pointed out three unresolved points: Washington has shown no willingness to ease export controls on advanced semiconductors, AI computing architectures, and lithography equipment, and related differences remain bipartisan consensus; The wording of rare earth supply remains "continue to strive," meaning supply issues remain unresolved; Taiwan has not been removed from the bilateral risk list.

On the Taiwan issue, China's position is clear and consistent. During the talks, President Xi Jinping stated that China's position on safeguarding national unity and territorial integrity is very clear, and hopes that the U.S. will uphold its correct stance against "Taiwan independence," handle the Taiwan issue prudently, and lay a solid foundation for China-U.S. strategic cooperation and the development of bilateral relations. This statement, together with the eight-point consensus, which states that "no country or institution shall levy tolls on international waterways," forms a clear line drawn by China on major fundamental issues.

The field of artificial intelligence best illustrates this state of "mechanisms established, competition continues": both sides agree to continue dialogue and set up communication channels, but the competitive relationship in advanced chips, models, and computing infrastructure remains unchanged.

Before Landing, The Noise Had Already Arrived

On September 25, during the visit, U.S. Republican Senators Dave McCormick and John Cornyn, along with Democratic Senators Ruben Gallego and John Fetterman, jointly introduced the "Act to Protect National Security Systems from the Threat of Chinese Optical Transceivers," which proposes banning the federal government's national security system from using Chinese-made transceiver modules, directly naming Zhongji Xuchuang and NewEasySheng, and setting a five-year transition period. Optical transceiver modules handle signal conversion between optical fiber and electronic devices, and are key components for high-speed transmission in AI data centers. As AI clusters expand, they are rapidly upgrading from 800G to 1.6T, with Chinese manufacturers holding about two-thirds of the global market share.

Some experts point out that the proposal "is still just public noise": the bill only applies to federal procurement and national security networks, does not cover private data centers, and the latter almost constitutes the entire demand for high-speed optical modules from Chinese manufacturers; Neither company is currently on the Federal Communications Commission (FCC) Regulated Companies List, and even if included in the future, it will not affect their sales to U.S. private enterprises; The bill offers a five-year grace period and allows for a limited, renewable exemption when substitute product supply is insufficient, but before it becomes law, it still requires a full legislative process.

The combination of "summit easing and congressional pressure" is not new, but it marks the timing of consensus implementation: mechanisms are built at the government level, friction comes from legislation, and market pricing often comes earlier than both.

The Reactions In The Chinese And US Markets Have Been Different

Last Friday (September 25), the three major U.S. stock indexes closed higher: the Dow Jones rose 0.93%, ending a three-day losing streak on the weekly chart. The S&P 500 rose 0.51%, and the Nasdaq gained 0.48%; Microsoft rose 3.66%, reaching its highest closing price since last November; Apple gained 1.53%, setting a new all-time closing high, with total market capitalization approaching $5 trillion.

Chinese assets are following a different path. On September 25, the Nasdaq Golden Dragon China Index closed down 0.64% at 5,687.91 points, with a weekly cumulative drop of 1.72%, continuing to decline since early August. On the same day, the Hong Kong Hang Seng Index fell 1.01%, and the Hang Seng Tech Index dropped 1.13%, with both losses widening to 2% in early trading.

The reason for the decline precisely shows that the price was not priced in China-US relations that day. The first layer of pressure comes from the interest rate side: the Hong Kong dollar is pegged to the US dollar, and the HKMA follows the Federal Reserve, pushing US Treasury yields upward, directly boosting the asset discount rate across the market; while the Hang Seng Tech Index constituents are mainly internet platforms and AI growth stocks, with generally lagging earnings and valuations heavily dependent on AI commercialization expectations over the next few years. When risk-free rates rise, the current value of these assets is the first to be discounted. The second layer of pressure comes from liquidity: Since the beginning of this year, southbound funds have accumulated net inflows exceeding HKD 380 billion, with information technology net inflows reaching HKD 100.2 billion, making it the most important marginal pricing force in the Hong Kong tech sector; After the southbound pause, when external risk appetite weakens and institutions demand to reduce positions, the same scale of selling requires lower prices to find counterparties, amplifying the decline.