The sector is well-positioned to weather this latest round of tariffs, and here are five reasons why.
The latest wave of US tariffs, dubbed “Liberation Day” tariffs, has jolted global markets. Among the targeted countries, China stands out—not just because it’s on the list, but because it has been here before.
Unlike other nations encountering this level of trade friction for the first time, China has already navigated a similar scenario during President Trump’s first administration. That earlier experience has helped shape China’s more calculated and resilient approach to US economic pressure.
As markets react to the growing uncertainty, investors are understandably concerned about the implications for Chinese equities. However, not all sectors are equally exposed. China’s internet sector appears particularly resilient in the face of these new trade barriers. With limited reliance on exports to the US, a robust domestic market, and a high degree of technological self-sufficiency, the sector is well-positioned to weather this latest round of trade tensions.
Here are five key reasons why China’s internet sector is proving resilient amid rising geopolitical risks:
1. China’s Refined Tariff Strategy
China’s familiarity with US tariffs stems from the 2018 trade war. Back then, strong political rhetoric and pragmatic negotiations helped the country endure economic pressure. Beijing combined fiscal stimulus, currency management, and diplomatic talks to limit the fallout. That same strategy is being used today to position the country to better weather this latest round of tariffs.
Having faced tariffs before, Chinese policymakers and companies have gained insights into managing trade disruption—balancing assertiveness with a willingness to engage in negotiations. This institutional knowledge strengthens China’s ability to respond strategically to evolving trade dynamics.
2. Reduced Dependence on US Exports
China has been steadily diversifying its trade relationships to reduce reliance on the US. Over the past few years, the percentage of exports going to the US has declined, thanks in part to initiatives like the Belt and Road Initiative and the Regional Comprehensive Economic Partnership (RCEP).
Evolution of trade from 2001-2023
Source: Lowy Institute, as of 2023
Source: Kraneshares, as of 31 Dec 2023
Concurrently, domestic consumption has become a key growth driver for China’s economy. As internal demand rises, the country becomes less vulnerable to external shocks—especially those originating from the US.
3. Minimal US Exposure in the Internet Sector
The KraneShares CSI China Internet ETF (KWEB), which represents major Chinese internet firms, derives less than 2% of its revenue from the US. That means companies like Tencent, Alibaba, JD.com, and Meituan are largely insulated from direct impacts of US tariffs.
Source: Kraneshares, as of 31 March 2025
These firms cater primarily to China’s domestic market—an enormous and growing consumer base of 1.4 billion people, worth an annual US$2 trillion. Their business models, built around e-commerce, cloud services, gaming, and digital payments, are deeply embedded within China’s digital ecosystem. Moreover, their tech supply chains are largely independent from US components, further reducing vulnerability.
4. A Broader Tariff Landscape
Unlike previous trade wars, this round of tariffs isn’t exclusive to China. Countries like Vietnam and Thailand are also facing high tariffs on exports to the US. This broad application levels the playing field and may even soften the blow for Chinese exporters.
In fact, it could encourage companies that previously shifted supply chains out of China to reconsider their decisions, especially given China’s unmatched infrastructure and scale in manufacturing.
5. Opportunities for Market Share Gains
Ironically, these tariffs might open doors for Chinese firms. With Southeast Asian competitors facing similar tariff pressures, China could regain its position in certain export sectors. This is particularly true in industries where China offers efficiencies and capacity unmatched by other countries.
How to invest in Chinese equities with Syfe?
At Syfe, you can get China equity exposure that aligns with your goals and preferences.
Balanced approach. If you’re looking for a balanced approach to gain exposure to global equities with a tilt towards China, the Core Equity100 portfolio is for you. The portfolio provides diversified global exposure. Designed for global diversification, the portfolio includes close to 10% exposure to China while maintaining a disciplined approach to risk.
Targeted exposure. If you want more focused China exposure, consider our Thematic Portfolio: China Growth, which we’ve built in partnership with KraneShares. The portfolio focuses on China’s new economy sectors – including innovation and technology, healthcare, and clean tech.
DIY option. You can also self manage your stocks through Syfe Brokerage. Hong Kong Exchange (HKEX) is now on Syfe Brokerage. From the globally recognised Hang Seng Index to industry titans like Alibaba (HKG: 9988), Xiaomi (HKG: 1810), Tencent (HKG: 0700), and more, HKEX provides a diverse array of investment options to suit your portfolio needs.
