Why is Wall Street expanding in China?
It may be a step on the way to China becoming a financial superpower
IN THE TECH industry the rupture between China and America continues to grow. Will Uncle Sam force a sale of TikTok, a Chinese-run app popular in the West (see article)? Can Huawei survive the embargo? Is Apple shifting its supply chains from China? Yet in one part of the global economy the pattern is of superpower engagement, not estrangement: high finance. BlackRock, a giant asset manager, has got the nod to set up a Chinese fund business. Vanguard, a rival, is shifting its Asian headquarters to Shanghai. JPMorgan Chase may spend $1bn to buy control of its Chinese money-management venture (see article). Foreign fund managers bought nearly $200bn of mainland Chinese shares and bonds in the past year. Far from short-term greed, Wall Street’s taste for China reflects a long-term bet that finance’s centre of gravity will shift east. And unlike in tech, both sides think they can capture the benefits of interaction without taking too much risk.
This article appeared in the Leaders section of the print edition under the headline “The exception”
From the September 5th 2020 edition
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