Welcome to newsletter 23 and apologies for its one-day late publication. This week saw the dimensions of the U.S.-China economic competition become ever more apparent.
In Washington the Trump administration announced plans to further limit Chinese companies access to U.S. stock exchanges and financing while in Beijing officials continue what looks like a major campaign to leverage their now successful response to COVID-19 to further strengthen China’s soft power.
Wrong and dangerous
“For decades, Chinese companies have availed themselves of the benefits of United States financial markets, and capital raised in the United States has helped fuel China’s rapid economic growth,” states the White House memorandum which aims to force Chinese companies that don’t follow the same transparency guidelines as other listed companies to exit U.S. exchanges.
“While China reaps advantages from American markets, however, the Chinese government has consistently prevented Chinese companies and companies with significant operations in China from abiding by the investor protections that apply to all companies listing on United States stock exchanges. It is both wrong and dangerous for China to benefit from our capital markets without complying with critical protections that investors in those markets rightfully expect and deserve.”
We have to have an industrial policy
While claiming that he feels very good about the progress of the phase-one trade deal (hard to believe that assertion, I’m afraid), U.S. Trade Representative Robert Lighthizer also raised some eyebrows by calling for the U.S. to adopt an industrial policy to counter China’s.
“We need a policy, be it subsidies, or tariffs, or whatever it takes. We have to have an industrial policy so we never find ourselves in this position again,” Lighthizer said, reports Bloomberg News reporter Jenny Leonard.
China suspends debt repayment?
On Sunday, Chinese officials launched what may be a major new plank in their effort to use the COVID-19 crisis to strengthen their soft power globally. Without yet specifying which countries will benefit, China’s State Council announced that it will suspend debt repayments for 77 developing countries and launch a $2 billion fund to help countries deal with the virus over the next two years.
Positive and open
And while it wasn’t noticed much as news about Hong Kong dominated headlines, during the recent National People’s Congress China’s premier Li Keqiang expressed interested in joining the CPTPP (Comprehensive and Progressive Agreement for Trans-Pacific Partnership).
CPTPP is the trade organization which includes Australia, Canada, Vietnam, Japan, and others, and was founded 18 months ago, as successor to the failed Trans-Pacific Partnership, following Trump’s decision to pull support for the earlier agreement. China “has a positive and open attitude towards joining CPTPP,” Li said, writes former U.S. trade official Wendy Cutler in a piece for Nikkei Asian Review.
Stabilize social order in Hong Kong
Meanwhile the Chinese government is ratcheting up the pressure on major companies that operate in Hong Kong to publicly state their support for the controversial national security law, with HSBC being the latest to give in.
HSBC “broke its silence over NSL, saying the bank "respects and supports all laws that stabilize social order in HK, and boost economic development." HSBC Asia-Pacific chief Peter Wong also signed petition in support of national security law earlier, per the bank,” tweets Alan Lum, a Hong Kong-based journalist.
Notable/In Depth
The East Asian supply chain, as shown by Apple’s experience, has weathered the pandemic remarkably well argues Damien Ma in MacroPolo.
Joining the WTO probably grew jobs in the U.S., argues Senior Fellow at the Center for Global Development Charles Kenny in a provocative tweet.
A plurality of Americans don’t think Chinese people should be blamed for the pandemic, according to a national survey by Boston University researchers.
Catch me talking recently about the Future of Chinese Capitalism, the national security law in Hong Kong and the U.S. response, and the economic impact of Covid-19 on China, in this video from the Mercator Institute for China Studies.