October 3, 2019 / 3:37 AM / 5 months ago

Breakingviews - China’s market reformers face a changing America

Traders work on the floor at the New York Stock Exchange (NYSE) in New York, U.S., October 2, 2019. REUTERS/Brendan McDermid

HONG KONG (Reuters Breakingviews) - Chinese reformers are running low on American friends. Washington is mulling whether to delist Chinese companies and curb American investment in their shares, according to reports. After decades lobbying for easier investment access, some U.S. politicians are clearly having second thoughts.

U.S. President Donald Trump green-lit a discussion within his administration on whether to evict mainland companies from domestic bourses, Bloomberg reported last week. More than 150 firms hailing from the People’s Republic were listed on American exchanges as of February, including giants such as the $432 billion Alibaba and $36 billion Baidu. The news agency also reported that U.S. officials are examining how they might limit American investors’ portfolio flows into China.

No decision is imminent, according to Reuters. A Treasury official said the administration is not considering blocking Chinese companies from exchanges at present, while White House adviser Peter Navarro called the reporting “fake news”.  Even so, the push has wider backing: a bipartisan group of legislators introduced a bill earlier this year that would force U.S.-listed Chinese companies to submit to more regulatory oversight or face delisting. Such a policy drive accompanies rhetoric from the White House encouraging American firms to shift supply chains out of the People’s Republic.

Successive American administrations have for decades pushed Beijing to open wider to U.S. companies and capital, albeit with limited success. Now mainland officials are taking long-delayed steps – such as lifting ownership caps on joint ventures in banking and autos, and widening financial channels for access to mainland markets –  just as some U.S. counterparts are considering ways to prevent American investors from taking advantage of them.

Chinese reformers have long relied on external pressure to justify ramming through painful changes at home. Many hoped American trade war demands might prove another such opportunity. That prospect has faded, in part because the Trump administration’s recent actions have dimmed hopes that the U.S. president is seeking a more market-friendly China, or that a permanent settlement is even likely. Beijing’s liberal contingent may be losing its American supporters just when it needs them most.


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