Alibaba Group Holding Ltd (NYSE:BABA) Reports Revenue Growth Giving Hope Of China’s Economic Recovery
Alibaba Group Holding Ltd (NYSE:BABA) has reported pre-pandemic revenue levels signaling hopes of China’s economic recovery. China, the economic powerhouse of Asia and the world’s second-largest economy, has seen a strong rise in its economy after bouncing back from the COVID-19 pandemic.
US-China trade war a big threat to Alibaba
The rebounding of China’s economy is great news for Alibaba, its e-commerce, and cloud giant. Despite having an optimistic outlook back home, the company is threatened by an escalating U.S-China trade war that has seen the Trump administration launched a crackdown on Chinese tech companies.
Despite the worsening relationships between the two global powers, Alibaba’s 2Q 2020 revenue growth returned to pre-pandemic levels. Alibaba is China’s most valuable corporation and enjoys a strong domestic market as well as a wide international network. In the second quarter of 2020, the company reported better-than-expected results with a 34% growth in sales. The company reported a 38% growth in sales in December before the pandemic caused lockdowns around the world.
The revenue growth is probably an indication of the success level in the company’s recovery plan. Alibaba is riding on growing consumer spending as the country slowly comes out of the pandemic, and the economy starts opening up.
Trump targeting Chinese tech companies
The trade conflict between the U.S and China, which started with retaliatory tariffs, has shifted in strategy with the Trump administration now directing its barrel to Chinese tech companies. Recently Trump signed an executive order directing ByteDance, the parent company of TikTok, to sell its U.S operations to a U.S company or exit the U.S market.
ByteDance is currently in talks with a number of U.S tech companies for a possible buyer. Microsoft has been a front runner in the race to acquire other U.S tech, and social media giants have expressed interest in TikTok. These include Twitter and Oracle, which joined the race recently.
Trump’s order is a big blow to the short-form video app has its user base in the U.S grows to more than 100 million users. The social media app is especially popular among Generation Z. To ease tension following Trump’s threats on Alibaba, the company’s CEO Daniel Zhang said the company’s policies “support American brands, retailers, small businesses and farmers.”