DECOUPLING THE ECONOMIES of China and the United States would be a Herculean task after three decades of globalisation. US Trade Representative Robert Lighthizer told a US Congressional Committee as much this week before he was tweeted down by his president, who said complete decoupling remains a policy option for his administration.
The president has taken policy measures aplenty to discourage Chinese trade and investment in the United States, with the intent particularly of keeping US technology out of Chinese hands. This is small-scale decoupling on the ground.
One example is the increased use of national-security reviews by the Committee on Foreign Investment in the United States, commonly known by its acronym CFIUS. It has had its mandate expanded and new scope to investigate property deals near critical infrastructure and military installations is also being added.
The committee’s latest report to Congress, from which the chart below is taken, makes clear both how much broader is the swathe of inbound foreign investments CFIUS is taking an interest in since President Donald Trump took office in 2017 and how increasingly effective a CFIUS investigation is in prompting would-be acquirers to back off.
Roughly one-quarter of CFIUS reviews involve Chinese acquirers, the largest share of any individual country.
Another is the administration’s threat to promote legislation that could force Chinese companies from US stock exchanges by requiring them to report to US accounting standards.
Bloomberg reported recently that 58.com, an online classifieds firm, was going to go private and thus delist its shares from a US exchange. That would make it the fourth US-listed Chinese company to do so this year, an aggregate removal of $8 billion in market capitalisation, the fastest pace of withdrawal since 2015.
Bloomberg reports a similar trend with initial public offerings, with global banks walking away from deals to list Chinese companies in the United States.
Nothing like full decoupling, to be sure, but a step in the direction of increased financial distancing.