Will Pandemic Change The Relationship Between Wall Street And China?

On April 17, in The Epoch Times's "American Thought Leaders" program, Kyle Bass, a hedge fund manager of the US, said that the loss of trust was increasing with the Chinese government's handling of the virus outbreak causing Wall Street to rethink its dealings with the country .

A normal American is also beginning to understand that:

 "the Chinese government is not reliable, they are not our friends and can be considered an immortal enemy."

said Kyle Bass.

According to Kyle Bass, in the near future, Wall Street's relationship with the Chinese government

 "will have to change. And I think it is happening right now. ”

As the pandemic of Wuhan pneumonia caused the world to pay dearly for life and economic damage, more and more countries and regions are re-evaluating their relationship with Beijing. 

In addition, disruptions to global supply chains have forced companies to consider reducing their dependence on China, as many of their factories are located here.

However, after the pandemic reduced its raging, it remains to be seen whether US financial institutions have begun to leave China.

Separated financially?

"Wall Street is always cooperating with China, fueling the Chinese economy."

 said Frank Xie, an associate professor at the University of South Carolina School of Business Administration.

According to Xie, Beijing's recent moves to open up its financial sector amid rising U.S.-China trade tensions since the 2018 trade war mean that Wall Street is unlikely to leave China soon.

 For example, investment banks Morgan Stanley and Goldman Sachs in March became the latest foreign banks to receive regulatory approval from China to have a majority stake in the securities joint venture company of they are in China.

In addition, although the Chinese government did not fulfill its commitment to opening the banking sector when it joined the World Trade Organization (WTO) in 2001, Xie said foreign banks,

 "still worked hard to win a piece of the Chinese market. ”

Mr. Xie said Wall Street banks have helped many Chinese companies to list on US stock exchanges. According to the US - China Economic and Security Assessment Committee, as of September 2019, there have been 172 Chinese companies listed on major US exchanges with a market capitalization of over US $ 1 trillion.

At the same time, according to Mr. Xie, some Western companies have recruited relatives of Chinese officials in an effort to win business in the country. For example, JPMorgan Chase in 2016 agreed to pay a fine of $ 264 million after recruiting relatives and friends of senior Chinese officials to gain access to banking transactions - a violation of the law. 

US bribes. Credit Suisse and Deutsche Bank also have to pay large fines to US regulators for similar activities.

Mr. Xie said that accounting frauds at Chinese companies, with the latest high-profile scandal of Luckin Coffee listed in the US, did not prevent investment companies.

He said;

 “I think they know a lot of [Chinese] companies are scams, that a lot of companies don't follow financial rules, reporting rules and accounting rules. However, they will continue to invest unless there are companies, revealing their wrongdoings. "

Eyes closed

Bass has condemned American financial companies and businesses for ignoring China's human rights abuses in pursuing the country's market.

“Can you imagine if you explained to someone that you are doing business with a regime where more than one million prisoners of conscience are detained, and are performing live organ harvesting on prisoners' populations is this political daily?”

he asked, referring to the Chinese government's support for the killing of prisoners of conscience, mainly Falun Gong practitioners , to harvest their organs and sold in the implant market.

"Yet companies like Blackstone can't wait to invest another dollar in China."

Bass continued.

"Do you know why? Because they let money blind them ... to the blatant human rights violations of one of the most authoritarian regimes that ever existed. Is crazy".

American action

According to Bass, the first step to remedy this situation is to make Chinese companies listed on US stock exchanges open their accounting books to US regulators. Currently, Chinese authorities are preventing the SEC (US Securities and Exchange Commission) or U.S. regulators from examining Chinese companies' audit papers, saying they contain "State secrets".

Last June, a group of bipartisan lawmakers introduced bills to the Senate and the House of Representatives to force Chinese and foreign companies listed in the US to comply with public regulations. U.S. financial statement, or else it won't be listed anymore.

U.S. public pension funds are also being increasingly scrutinized for investments in Chinese companies, including funds that support Beijing's military, espionage and human rights abuses.

In recent years, global stock index providers such as MSCI and FTSE have added Chinese stocks to their global and emerging market indices, allowing billions of dollars of Chinese investment. States flowed into Chinese stocks.

One of the companies included in MSCI's index is China's manufacturer of digital surveillance equipment Hangzhou Hikvision, which was put on the U.S. blacklist last year because of its technology have been used to suppress Uyghur Muslims in Xinjiang region in western China.

"It's crazy that our federal and military personnel are indirectly contributing to China's military operations - and what's worse is that almost all of them are completely ignorant of This situation."

US congressman Mike Waltz said in a statement on April 24.