Forcing Chinese companies to delist from U.S. Stock Exchanges in the midst of a breakdown crisis could be a very dumb move, yet that appears to be going ahead, starting with the three biggest Chinese telecoms. The delisting had been put on hold on Monday, Jan. 4, but reportedly will now proceed after Treasury Secretary Mnuchin called the head of the New York Stock Exchange last night.
That America-hating City of London mouthpiece, The Economist, opined yesterday that “a rupture seems inevitable,” but how great an impact the delisting will have depends on how extensive it will be. Rumors are that two Chinese state energy giants, PetroChina and the CNOOC, could be next, it wrote, but even if the delisting is extended to all 12 state-owned companies on the NYSE, it won’t be a big deal. However, if the over 200 Chinese private sector firms now on the exchange are also delisted for their alleged or real links to the Chinese military (PLA), over $2.2 trillion of market capitalization would be affected. (Goldman Sachs may take quite a hit: The Economist reports it estimates that it holds over a quarter, 28%, of that China-linked stock value.
The Economist expects Biden to hold firm on this anti-China policy. Biden is “unlikely to go easy on China” and “may hesitate” to rescind Trump’s EO affecting more than 30 firms for their PLA links, they recommended.
The decoupling policy expanded with yesterday’s new Executive Order from President Donald Trump to counter “the continuing threat posed by Chinese software applications.” National Security Adviser Robert O’Brien announced that eight Chinese companies, including digital payment services, are now prohibited. On the grounds given for the ban, no Chinese company could ever operate within the U.S., because it asserts that “the Chinese government requires that all commercial companies, big and small, support the Chinese Communist Party’s political objectives.”
China’s daily Global Times has suggested that China is considering retaliating by requiring U.S. companies doing business in China to disclose their links to the U.S. military. Chinese Foreign Ministry spokeswoman Hua Chunying would not answer whether that is coming, but she did remark that the United States has a “long history of civil-military fusion ... and many American multinational companies are the result of military-civil fusion themselves.” Hua warned that it is the U.S. stock markets which are going to take the hit “since the position of the United States as an international financial hub hinges on global companies and investors trusting the inclusiveness and certainty of its rules and mechanisms.”
