How the US-China trade war shaped CATL’s blockbuster Hong Kong debut

China’s battery behemoth CATL just pulled off the biggest IPO of the year, but the buzz around its $4.6 billion Hong Kong debut wasn’t just about market performance, it was about who wasn’tallowed to invest.

In a striking sign of deepening US-China financial tensions, onshore American investors were reportedly barred from buying shares of CATL, the world’s largest EV battery maker and a key supplier to Tesla, Volkswagen, and Toyota.

The move underscored a growing “financial decoupling” between the world’s two largest economies. Economist Stephen Roach, former chairman of Morgan Stanley Asia, told The New York Times that “we are headed toward full financial decoupling with China” and added that “Congress is driving the process of disengagement.”

Why is CATL’s IPO a big deal?

Contemporary Amperex Technology Co. Limited (CATL) dominates the global electric vehicle battery market, controlling more than one-third of global EV battery sales, according to the BBC. The company is a cornerstone of China’s green tech ambitions and is rapidly expanding overseas, with manufacturing plants in Germany and Hungary, and an upcoming factory in Spain in partnership with Stellantis.

Although already listed on the Shenzhen Stock Exchange, CATL raised HK$35.7 billion ($4.55 billion) in its Hong Kong debut — the largest public offering of 2025 so far, according to data provider Dealogic, as reported by The New York Times.

Neil Beveridge, head of Asia research at Bernstein, told the BBC that “the performance of the stock was very good in what is going to be a key IPO for Hong Kong given the size of the listing.”

Why were US investors barred?

The exclusion of onshore US investors from CATL’s Hong Kong listing was a direct result of escalating geopolitical tensions. In January, the US Department of Defense designated CATL as a company allegedly working with China’s military, a move that was reported by both the BBC and The New York Times.

Then in April, the chair of the House Select Committee on China wrote to the CEOs of JPMorgan and Bank of America, urging them to withdraw from the IPO, according to the BBC. In addition, The New York Times reported that US lawmakers lobbied Wall Street banks to distance themselves from the deal, citing national security concerns.

Facing mounting scrutiny, CATL restructured its IPO as a Regulation S offering, effectively barring onshore US investors and avoiding certain regulatory filings in the United States. In regulatory documents, the company admitted that it faces “risks associated with changes in trade policies or tariff regulations,” as reported by The New York Times.

CATL also strongly denied any ties to military operations, stating it “has never engaged in any military-related businesses or activities” and had reached out to the Department of Defense to challenge what it called a false designation.

The bigger picture: Financial decoupling

CATL’s listing marks a dramatic reversal from the earlier trend of Chinese tech firms pursuing Wall Street debuts. When Alibaba went public on the New York Stock Exchange in 2014, it raised $21.8 billion and was celebrated by American investors and bankers.

But according to The New York Times, the current climate is very different, with Chinese companies increasingly steering clear of US markets due to both political pressures and policy constraints.

Experts believe this may just be the beginning. Victor Shih, a specialist in Chinese finance at the University of California, San Diego, told The New York Times that CATL’s IPO structure represents “a major milestone” and predicted that “this will apply to many Chinese hardware and even some software producers,” effectively shutting out American investors from future high-growth opportunities. He estimated that around 10 per cent of US investors might have participated in the CATL IPO had they not been restricted.

Can tariffs hurt CATL?

Not as much as one might expect. CATL generates nearly 70 per cent of its revenue from the Chinese market, which has helped buffer the company against the effects of US-imposed tariffs, according to the BBC.

Despite trade headwinds, CATL continues to be a global innovation leader. In April, it unveiled a new battery capable of fast-charging up to 323 miles (520 kilometers) in just five minutes, as reported by the BBC.

The company also provides lithium iron phosphate batteries to Tesla’s Shanghai Gigafactory, further cementing its global presence.