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Why the U.S.-China conflict is threatening the future of Wall Street

5 6 0
31.08.2021

During the U.S. presidential campaign last year, Jake Sullivan, who is now national security adviser to President Joe Biden, criticized the administration of then-President Donald Trump for having prioritized policies beneficial to Wall Street.

“Why, for example, should it be a U.S. negotiating priority to open China’s financial system for Goldman Sachs?” he asked.

Similar sentiments were expressed by Biden himself. In his address to a joint session of Congress in April, he received a round of applause when he said, “Wall Street didn’t build this country. The middle class built this country.”

Trump had former executives of Goldman Sachs Group Inc. in his administration, including Gary Cohn, who served as head of the National Economic Council, and Treasury Secretary Steven Mnuchin.

Mnuchin was the Trump administration’s top negotiator in the U.S.-China trade talks along with U.S. Trade Representative Robert Lighthizer.

In a “phase one” trade agreement signed by the two nations at the beginning of 2020, China agreed to loosen restrictions on foreign financial services companies, eliminating foreign equity limits in the country’s financial services sector, among other measures.

The Trump administration was also focusing on the working class, as getting support in the industrial Rust Belt regions is indispensable in winning the presidential election.

Both the Democrats and the Republicans attach importance to workers in the manufacturing industry, but the Biden administration has leaned even more in their direction.

There are some former executives of asset management firm BlackRock Inc. in the Biden administration, such as Brian Deese, head of the National Economic Council, and Deputy Treasury Secretary Wally Adeyemo, but few former executives of investment banks like Goldman Sachs.

Gary Gensler, chair of the U.S. Securities and Exchange Commission (SEC), is a former Goldman Sachs executive, but he is known for his harsh stance against Wall Street as chair of the Commodity Futures Trading Commission (CFTC) in former President Barack Obama’s administration.

Insufficient inspections

The general public in the United States casts a stern eye on Wall Street, where wealth is concentrated as a result of globalization.

The challenges faced by Wall Street amid rising U.S.-China tensions can be discussed from two perspectives: the U.S. financial market and the financial markets in Hong Kong and mainland China.

Chinese firms’ initial public offerings in the U.S. market are an attractive business for U.S. investment banks.

During the U.S. presidential campaign last year, Jake Sullivan, now national security adviser to President Joe Biden, criticized the administration of then-President Donald Trump for having prioritized policies beneficial to Wall Street. | BLOOMBERG

As many as 34 Chinese companies filed an IPO in New York in the first half of this year, raising a total of $12.4 billion, leading to commission income of $460 million.

But there have been concerns that inspections of Chinese firms are insufficient.

The Public Company Accounting Oversight Board (PCAOB) has the authority to inspect auditors of........

© The Japan Times


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