CHINA-US: CHINA-US TRADE WAR POISED TO INTENSIFY IF NEW BILL PASSES IN US SENATE
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The Nikkei-Asia index reported (July 26) that US Senator Marco Rubio last month introduced legislation that would increase oversight of Chinese companies listed on American stock exchanges, delisting those that fail to comply with the new requirements. Days later, he queried U.S. index compiler MSCI about its addition of domestic Chinese stocks to its global indexes, saying it risked exposing American investors to corporate fraud. If passed, Rubio's Bill would represent a new front in the U.S. economic war with China and could have a dramatic impact on global investment flows. Such a law would weigh heavily on China-related stocks around the globe and could even have domestic political repercussions for President Xi Jinping. A listing in New York has long been seen as confirmation for Chinese companies that a company is indeed one of China's best and brightest. U.S. regulators have never been able to examine audit documents from Chinese companies as Beijing considers that practice a breach of its sovereignty and a risk to its state secrets. The escalation from import tariffs to capital markets means that the U.S. and China are now engaged in the early stages of an economic war. It is only recently that the U.S. administration has recognised that America's advantages in taking on China lie in its control over the global reserve currency and the world's greatest capital market. The U.S. has many alternatives to China while China's options are limited.
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