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Friday, September 24, 2021

DOES DE-COUPLING  WORK PART 2 #285

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Graham Perry
Experienced Arbitration Lawyer | China & Chinese Business Affairs | Public Speaker/Lecturer.

GOOD MORNING FROM LONDON

Can the combined might of West blunt China’s economic progress? Can the West significantly de-rail China’s surge of growth? The present evidence is that the economics of Wall Street is ignoring the politics of Washington and taking big steps to increase, not decrease, its investments in China. So why do some Western commentators believe that Washington will win + that de-coupling will set China back?

First, George Magnus of the FT, warns Wall Street – citing the recent Didi experience – that it will be directly exposed to China’s Government crackdown against quasi-finance, technology + data-intensive platforms where foreign funds have been lodged. On the contrary, Wall Street will be pleased that the Government is cracking down on Chinese firms who abuse their growing power + influence to break the law. China is regulating Capitalists in China to ensure they conform to the law. The Ant intervention sent a strong message. Wall Street is happy not unhappy.

Second, Magnus asserts that Wall Street Investors are affected by new US legislation that empowers the Securities and Exchange Commission to demand disclosure of Chinese companies shareholder information, boardroom links to the Party and the release of audit records to US authorised supervisors. This will lead to the de-listing of Chinese companies which Magnus says will create illiquidity and risks of loss for Chinese companies. The US may try to close off Wall St to Chinese companies and believe this act of de-coupling will hurt China. But China’s increased activity in Hong Kong and other financial centres shows that China not only survives but thrives the more Washington tries to act like King Canute and stem the flow of business interest in China.

Magnus says Politics and Washington will win. There is a compelling alternative – that Economics and Beijing will win.
Graham Perry

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