THE MOTIVES BEHIND CHINA OPENING UP TO FOREIGN COMPANIES

Posted by freemexy on March 17th, 2021

In a recent op-ed, I wrote about how the controversy over Disney's live-action "Mulan" embodies some of the ethical dilemmas and pitfalls that face companies doing business in China. On one hand, to maintain their presence in China, companies must comply with the demands and expectations of the Chinese Communist Party which are intended to garner support for the CCP's viewpoint and policies. On the other hand, their compliance comes with the cost of significant reputational risk at home.To get more finance news China, you can visit shine news official website.

Western media companies such as Disney and Comcast, however, are but pawn pieces in a game in which there are far more powerful pieces that the CCP has its eyes on controlling: Western banks and financial institutions. In this game, China is thinking a dozen moves ahead of their ultimate opponent, the United States.

And since China's path to victory in this game depends in large part on our ignorance of their strategy, Americans will quickly need to get up to speed on both in order to compete.

To understand China's game, it's helpful to begin by studying their current tactic, which involves aggressively opening up their financial markets to the U.S. in ways that they hadn't previously despite tense political relations over reforms between the two nations.

In recent months, leading Wall Street firms BlackRock, Vanguard, Citigroup, and JPMorgan Chase have been given approval by China to expand their businesses there. In August, BlackRock received official approval from the Chinese government to set up a mutual fund business in Shanghai. Just days later, Vanguard announced it was moving its regional headquarters to Shanghai. JPMorgan Chase, meanwhile, is set to pay billion to become the first foreign company to assume full ownership of a preexisting Chinese mutual fund business. This is in marked contrast to Beijing's previous requirement that Western firms partner with local Chinese entities in order to do business in China's financial markets.

So, why is China opening up its markets more fully to Western investment firms now? China doesn't need the money, for if it did they could just print it or easily borrow it. One reason could be that China wishes to study Western banking models. There are numerous examples of China bringing in Western companies, letting them make money while learning everything they can from them, and then setting up competing enterprises to betray and destroy their Western partners. When a foreign company seeks redress via the legal system, as the Dallas-based Tang Energy Group has done against the state-owned Aviation Industry Corporation of China (AVIC), they find China to be a formidable opponent even when fighting on home turf.