China finance forum urges US cooperation

China finance forum urges US cooperation

A group of senior Chinese regulatory officials and financial experts is calling on their home nation to co-operate with the US to avoid further escalations of the ongoing trade war.

The China Finance 40 Forum (CF40) is urging China to reform financial markets to avoid US sanctions, according to reports in The South China Morning Post.

The think tank says that more open financial markets would help attract foreign investment, foiling any attempts by the US to impose sanctions.

Relations between the superpowers remain difficult, with growing concern in Beijing that the US will freeze China’s banking sector out of the global US dollar payments system.

There could also be stricter scrutiny of Chinese investments in the US and a possible delisting of US-listed Chinese companies, after a series of events arising this year.

Following a fraud scandal around US-listed Chinese chain Luckin Coffee, the US Securities and Exchange Commission (SEC) issued a lengthy statement on the risks of investing in emerging market companies.

Tensions rose further, with regulators and lawmakers on either side of the global spat getting involved, and fears growing that the trade war could escalate into a full conflict in the name of national security. The US recently announced sanctions on Chinese officials and entities involved in the human right violations in Uighur-populated Xinjiang and the undermining of Hong Kong’s autonomy.

In this latest report, the CF40 suggests a co-operative approach to ease tensions by trying to appeal to US investors with China’s growth prospects.

“We’ll use higher-level financial opening up to counter the increasingly complicated international environment, and strive for mutual benefits … We also need to strengthen financial regulatory capability, international cooperation and coordination,” the report said.

Xiao Gang, former chairman of the China Securities Regulatory Commission and leader of the report, warned that the rising bilateral rivalry could affect existing financial connections.

“Our financial institutions could face long-arm jurisdiction and even economic sanctions. Some executives could also be sanctioned,” he said. “Under the current situation, we should not only keep fighting, but also make good preparations by developing our own financial markets. Building a super-large financial market can lower the possibility of financial decoupling.”

Last Updated: 8 September 2020
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