As financial markets adjust to the ongoing uncertainty of President Donald Trump’s tariff policy, an overlooked shift is occurring in US-China economic relations, particularly on the Hong Kong stock market.
Recently, a Chinese technology company has moved away from Wall Street by launching a significant initial public offering (IPO), marking it the world’s largest share offering in 2025.
Contemporary Amperex Technology Co. (CATL), a leading battery manufacturer, initiated a $4.6 billion IPO in late May.
This bold move serves as a direct response to the US Department of Defense’s decision to place CATL on a watchlist due to alleged ties to the Chinese military.
The action underscores the increasing fragility of business ties that once seemed unbreakable between these two global economic giants.
The trend of Chinese companies opting for Hong Kong over New York for their IPOs is steadily increasing.
After years of foreign investors retreating from Hong Kong, particularly due to political tensions stemming from protests in 2019, the Chinese government is now directing firms to consider Hong Kong as their primary venue for public listings.
Notably, Chery Automobile, China’s second-largest car maker, is preparing a $1.5 billion share issue in Hong Kong.
Currently, approximately three-quarters of the top twenty-five Chinese firms that are listed on Wall Street have also established listings in Hong Kong, collectively accounting for 60 percent of the market’s total share value.
This strategy aims to create an alternative avenue for funding and trading, anticipating potential delisting threats from the United States—threats that have been a consistent part of the ongoing dialogue between the two nations.
In recent statements, US Treasury Secretary Scott Bessent mentioned that “everything is on the table,” indicating the nation’s commitment to explore options surrounding forced delistings of Chinese stocks.
Despite these tensions, the potential for American investors to access Chinese stocks remains: those with accounts outside the US can freely trade their shares listed in Hong Kong.
However, many institutional investors, due to regulatory limitations, could not partake in the CATL IPO, given that the offering was designed specifically to avoid US regulatory scrutiny.
Beijing’s active role in revitalizing Hong Kong’s status as a financial hub cannot be overlooked.
The strategy centers around positioning the city as the premier venue for offshore renminbi transactions while also enhancing its role in the public listing sphere.
Interestingly, a senior Chinese official disclosed that 80 percent of mainland businesses aiming for offshore listings now prioritize Hong Kong, which is likely bolstered by support from Chinese regulators.
The core issue in the backdrop of this transition is tied to national security; both the US and China are wary of the implications of Chinese companies operating on US exchanges.
For the past five years, each US presidential administration has sought to limit the presence of companies they perceive as extensions of China’s military-industrial complex on American financial markets.
Starting in 2020, the Trump administration took key steps to ban US investments in companies with alleged links to the Chinese government’s military, resulting in higher scrutiny on certain state-owned enterprises and several notable delistings.
Simultaneously, Chinese regulators have raised concerns regarding US financial disclosure requirements, viewing them as potential threats to national security.
Disputes over US auditing practices have emerged repeatedly as headline issues between the two nations in recent years, culminating in legislation from the US Congress mandating mass delistings if cooperation from Beijing wasn’t forthcoming.
Though a 2022 agreement allowing American financial oversight momentarily eased tensions, the strain between US and Chinese interests remains palpable.
Since 2021, China has intensified scrutiny over its companies looking to list in the United States, leading to tighter controls over American investors engaging with Chinese entities.
The recent downturn in US venture capital investments into China amplifies these tensions.
Specifically, American venture capital investments plummeted to $1.62 billion in 2024 compared to a prior high of $40.81 billion in 2018.
Additionally, President Donald Trump’s national security memorandum from February outlines plans to further tighten restrictions on capital flows between the two nations.
Highlighting a domestic political element further reinforcing Beijing’s IPO decisions, Chinese leader Xi Jinping’s initiatives to exert control over the private sector have been intricately linked with regulation of foreign listings.
The clampdown on corporate fundraising from US markets began with a significant move in late 2020 when the Chinese government blocked a major planned IPO of Ant Group, the financial unit of Alibaba, in response to Alibaba Chairman Jack Ma’s criticisms of local regulators.
Since then, the progression toward tighter frameworks governing US listings has been closely aligned with declining US-China relations.
Following the Biden administration’s steps extending restrictions in 2021, China delayed a massive IPO by the ride-hailing service Didi Chuxing.
That delay was soon followed by a forced delisting in response to noncompliance with regulatory demands, which also triggered a series of regulations demanding stricter oversight for all companies pursuing foreign listings.
As a consequence, Chinese IPOs in the US have yet to recover their prior momentum.
According to data from the US-China Economic and Security Review Commission, only forty-eight Chinese companies launched IPOs in the United States between January 2024 and March 2025, raising a total of $2.1 billion.
In notable contrast, thirty-two companies managed to raise $12.1 billion in 2021 alone.
Even before CATL’s significant listing, there has been a noticeable resurgence of IPOs in Hong Kong this year, with the count of deals climbing 25 percent in the first quarter, while total listing values skyrocketed by 287 percent, reaching about $2.3 billion.
The ten largest IPOs to date rely solely upon Chinese companies pursuing this opportunity.
While the Hong Kong market appears to present exciting new opportunities, it’s essential to recognize its drawbacks compared to the esteemed Wall Street.
Though there are advantages, including access to mainland investors through special programs, Hong Kong’s financial landscape suffers from volatility, lower trading volumes, and comparatively lower valuations relative to earnings.
A Hong Kong market listing is also perceived as less prestigious than one on Wall Street, which can result in less favorable financing conditions.
Additionally, stricter regulatory environments in Hong Kong may inhibit many smaller companies already listed in the US from gaining dual listings.
Ultimately, it remains to be seen if the growing allure of China’s domestic investors can sufficiently compensate for losing access to US markets.
However, the real beneficiary of this evolving landscape appears to be the Chinese government.
Rather than losing the financial benefits of overseeing a market they cannot control, Beijing is opting for a financial center that aligns closely with its political needs.
The calculations over the past five years indicate that the political advantages of establishing Hong Kong as a dominant economic center with Chinese characteristics outweigh the potential setbacks this decoupling might have on China’s private sector economy.
image source from：https://www.atlanticcouncil.org/blogs/econographics/sinographs/hong-kong-highlights-chinas-policy-of-decoupling-from-us-financial-markets/
