President Donald Trump was very straightforward and clear when he said that the US now sees China as a strategic rival rather than a partner. And for more than a year since President Trump fired the first shot that opened the trade war between the US and China, a new front has begun to take shape in the capital market.
Despite trade wars, 34 Chinese-based companies raised $ 9.2 billion in the US last year, double that of two years ago, four of which - including suppliers iQiyi online entertainment service, discount shopping web Pinduoduo, Nio electric car company and online music service Tencent Music, each company has raised more than $ 1 billion from IPOs in the US.
When the total market capitalization of Chinese companies listed in the US has reached 1.2 trillion USD, the worry is increasing, US investors are suffering from risks that they do not understand. . In a joint statement in December, the US Securities and Exchange Commission (SEC) and PCAOB pointed out that Chinese companies listed in the US are the most important challenges faced by US investors.
American lawmakers cannot, of course, stand by. Last month, Senator Marco Rubio made his official point of view, whereby he required legal policies to strengthen supervision of Chinese companies listed on the US stock exchange. even delisting for businesses that do not comply with US requirements.
A few days later, Mr. Rubio made more aggressive moves in questioning the MSCI index translation department about adding Chinese companies’ stocks to his global indicators. According to Mr. Rubio, this will eliminate the risk of fraud for US investors.
In a letter to MSCI calling for a reconsideration of this decision, Rubio wrote: " We can no longer allow the Chinese government to reap the fruits of the US and international capital markets, while the public Their companies are not financially transparent and put US investors at risk . "
If it is really approved, this Senator Rubio’s bill will represent a new front in the economic war between the United States and China and maybe this will have a strong impact on the inflow of capital. global investment.
Such a law would weigh on Chinese-related stocks in the global stock market, possibly even creating political consequences in China for Xi Jinping.
Chinese companies have been penetrating the US stock market since the early 1990s. Listed on the New York stock exchanges has long been considered a confirmation that a certain company is in the list. books of China’s best and brightest companies.
However, this list of companies is not something that guarantees them good corporate governance. US regulators have never been able to check auditing documents from Chinese companies because Beijing considers that this check will violate the privacy of companies as well as create risks to state secrets.
The escalation of tariffs between the US and China is actually only a small part, and is also the first stage of a comprehensive economic war. Recently, Washington has recognized that America’s advantages in the war with China lie in the control of the global reserve currency and the world’s largest capital market.
In American politics, it’s not just Senator Rubio who has strong opinions about Chinese companies listed on the US stock market, but many other politicians share the same. opinion.
Legislators also tried to suspend another financial mechanism - which allowed the US market to have more connections with China, or asked President Trump to limit investment in US government funds and Chinese companies, or at least offer a blacklist of companies, especially Chinese state-owned enterprises, to warn US investors.
This is not impossible, through the Ministry of Finance Foreign asset Control Office, Washington has complete power and ability to do this. In the past, Washington used this power to force US fund managers to divest from Rusal - a Russian aluminum producer listed on the Hong Kong floor.
At that time, the leader of this business was said to have close relations with President Vladimir Putin. Even the Bloomberg data provider of the United States did not publish Rusal’s stock prices for months for fear of violating sanctions.
Wall Street became a tussle between two US-Chinese financial systems
If the US blacklisted Chinese companies according to Russia’s criterion of Rusal, billions of dollars of stock would be dumped. The US investment firm Black Rock alone holds about $ 3.3 billion in investments in listed trading funds on the Hong Kong exchange.
These funds are thought to be associated with Chinese domestic stocks alongside other mutual funds. And Beijing cannot have adequate reprisals, because the amount of money China invests in overseas securities is not much, due to its capital controls.
Even if China reacts by dumping stocks of American companies or other bonds, they will "batter his back" because the US bond market has enough liquidity to handle the problem, right away. Chinese sales are also strong.
The proposal of Senator Rubio in particular, and the strong involvement of American politicians in general, has marked the most dramatic escalation in America’s comprehensive trade war against China, and Wall Street. is a latest "front".
