China is about to get a big infusion of cash from some of America’s biggest financial firms.
The country from which coronavirus originated–and indeed may have even profited off of US taxpayer efforts to save our economy through its receipt of PPP loans–stands to possibly become the new financial center of asia… with Shanghai gaining status as the next New York or London china…thanks to U.S. investment.
Super-sized bank Citi announced it is the first U.S. bank to receive a domestic fund custody license from the China Securities Regulatory Commission. Meaning it can operate in China…and sell its investments to the Chinese.
Blackrock is also getting in on the action, announcing plans to sell its securities to the Chinese market. Meanwhile, American insurer Chubb had been allowed to increase its stake in Huatai Insurance Group to 46%, thereby becoming the biggest shareholder of the Chinese firm.
American firms are aiming to gain access to the billion plus people of China. That’s a lot of people they can help invest, right?
Yet, while it may be a good near-term money making opportunity… what are the costs?
Certainly, given the lack of legal structure in China, these companies risk being kicked out by the CCP at any time. In addition, they risk their intellectual property…ie, their trading algorithms, being stolen. Meanwhile, as a country, we risk China attempting to someday surpass Wall Street as the financial capital of the world.
Why give China that chance?
This, as we get word that a large portion of the PPP money, may have wound up in the hands of China, itself..
Indeed, per a review of publicly available loan data by the strategy consulting firm Horizon Advisory, $192 million to $419 million has gone to more than 125 companies that Chinese entities own or invest in. Many of the loans were quite sizable; at least 32 Chinese companies received loans worth more than $1 million, with those totaling as much as $180 million.
We need to be focused on China…because clearly, China is focused on us.