China is opening up its financial markets to Western firms and investors. It's about time
, tech war, new cold war or just plain decoupling: call it what you will, the confrontation between America and China has been bruising. Tariffs are up, exports down. Even as they resume trade negotiations, they talk of blacklisting each other’s firms. In the words of Henry Paulson, a former American treasury secretary, the danger is that an “economic iron curtain” will soon divide the world. All the more remarkable, then, that one crucial sector—finance—is bucking the trend.
For years Western insurance firms, asset managers and brokerages have been allowed to own only minority stakes in local firms. Now China is giving foreign financial firms more leeway on the mainland. Since mid-2018 they have been able to apply for 51% control. On July 2nd Li Keqiang, China’s prime minister, said that financial firms would be allowed full control by 2020.That is not the only sense in which financiers and trade negotiators exist in parallel universes.
China needs to make this opening count. Many Wall Street bosses have gone from Sinophiles to hawks in the past few years. So, tactically, China has a chance to win brownie points with America’s business lobby. That gain could be dwarfed by the benefits within the country itself. Western firms will push up standards in its immature but giant capital markets, a priority if it is to allocate capital more efficiently and get more out of its savings.
Some political figures in the West argue that financial links with China count as a betrayal. Steve Bannon, who was once President Donald Trump’s adviser, talks of removing Chinese companies from American stock exchanges. Marco Rubio, a hawkish Republican senator, has accusedof channelling American cash to the Chinese Communist Party by including state-owned companies in its benchmarks.
In fact closer financial links could have a beneficial effect, which is why longtime China-watchers like Mr Paulson back them so strongly. When Chinese firms have foreign shareholders or underwriters, their calculations change. They face tougher questions, as Alibaba, a Chinese e-commerce giant, is reminded on every earnings call.
United States Latest News, United States Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
China tests anti-ship missile in South China Sea, Pentagon saysChina has test-fired at least one anti-ship missile in recent days in the area around the contested Spratly Islands in the South China Sea, the United States military confirmed Tuesday.
Read more »
Trade can no longer anchor America’s relationship with ChinaChina and America are locked in a new kind of cold war. This one could leave no winners
Read more »
Big farms find easy ways around Trump trade aid limitsAn AP investigation reveals how farmers struggling under the financial strain of Trump's trade dispute with China were able to receive more than the capped payments allotted by the administration's $12 billion aid package.
Read more »
Asian shares weaken as trade optimism fadesAsian shares fell on Wednesday as initial enthusiasm over the latest U.S.-China ...
Read more »
‘Three Seconds’ Becomes Highest Grossing Russian Film Ever in China (EXCLUSIVE)Sports drama “Three Seconds” has become the highest grossing Russian film of all time in China, with an 85 million yuan ($12.3 million) gross. Previous Russian hits in China include &8…
Read more »