US-Listed Chinese Stocks Fall As China's Central Bank Keeps Key Rates Steady

On Friday, China’s central bank, the People’s Bank of China (PBOC), decided to maintain its main benchmark lending rates amid efforts to support economic growth while managing a weakening yuan.

The one-year loan prime rate (LPR) remains at 3.1%, while the five-year LPR is steady at 3.6%, influencing corporate loans, household lending, and mortgages.

This decision aligned with expectations from a Reuters poll of 27 economists, CNBC reports.

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The rate freeze comes after the U.S. Federal Reserve’s widely expected 25-basis-point rate cut earlier this week. The Fed also signaled only two rate reductions in 2025, fewer than previously anticipated.

Chinese tech barometer Alibaba Group Holding BABA traded lower on Friday. Other U.S.-listed Chinese stocks are also trading lower, including Baidu, Inc. BIDU, JD.com, Inc. JD, PDD Holdings Inc. PDD, and XPeng Inc. XPEV.

Lower interest rates make borrowing cheaper for capital-intensive companies on an expansion drive, especially artificial intelligence technologies.

Analysts indicated to CNBC this development may influence global monetary policy but will likely have a limited direct impact on China’s easing trajectory. However, it could exacerbate pressures on the yuan, which is already under strain from economic challenges.

Economic data indicates that China continues to grapple with deflationary pressures, lackluster consumer demand, and a prolonged property market slump despite various stimulus measures initiated in recent months. China’s 2025 economic forecast encounters external challenges, such as geopolitical tensions, semiconductor restrictions, and tariff threats from U.S. President-elect Donald Trump.

Earlier this month, Chinese policymakers pledged to enhance monetary easing measures, including further rate cuts, to invigorate the economy. However, the PBOC held rates steady in November following October’s modest reductions, opting for a cautious approach.

Yan Wang, Chief Emerging Markets and China Strategist at Alpine Macro, told CNBC that while further rate cuts might alleviate the yuan’s deflationary pressure, the government’s fiscal flexibility is more likely to drive economic recovery in the coming year.

Price Actions: At the last check on Friday, BABA stock is down 3.10% to $81.71. JD is down 2.53%, BIDU is down 1.85%, PDD is down 3.56%, and XPEV is down 3.15%.

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