White House is considering limits U.S. On US Portfolio In China, progress that would have repercussions for billions of dollars in investment pegged to major indexes, according to people close with the internal deliberations.
This move is completely enough for an escalation in the trade war between America and China. They’re additionally considering de-listing Chinese companies from US exchanges, examining limits on the Chinese companies included in stock indexes managed by US firms.
The report says Trump has given a green light to the negotiations but that any plan would be subject to his approval. This seems a bit like a leak to put weight on China but the trade is to de-risk and ask questions later.
Chinese stocks are getting hit particularly hard. I find it hard to accept that we’re headed towards a true, permanent trade deal when this kind of thing is on the table.
On Friday, Bloomberg News reported that the White House is weighing Limits On US Portfolio In China and has been talking to Sen. Marco Rubio about his efforts to set stricter standards for Chinese companies’ inclusion in broad market indexes. Such moves could potentially affect billions of dollars of investment.
The discussions are occurring as Washington and Beijing negotiate a potential truce in their trade war that’s rattled the world’s two biggest economies and investors for more than a year.
They additionally come as China is pushing limits on foreign investment in its financial markets. A U.S. crackdown on capital flows would, therefore, expose a new pressure point in the economic dispute and cause disruption well beyond the hundreds of billions in tariffs the two sides have levied against each other.
Between the options, the Trump administration is considering: delisting Chinese companies from U.S. stock exchanges and limiting Americans’ exposure to the Chinese market through government pension funds.
Exact mechanisms for how to do so have not yet been worked out and any plan is subject to approval by President Donald Trump, who has given the green light to the discussion, according to one person close to the deliberations.
Administrators are investigating how the U.S. could put limits on the Chinese companies included in stock indexes managed by U.S. firms, although it was not obvious how that would be done, the agency cited three sources as saying.
A bipartisan group of U.S. lawmakers in June introduced a bill to force Chinese companies listed on American stock exchanges to submit to regulatory oversight, including providing access to audits or face delisting.
Chinese authorities have long been reluctant to allow overseas regulators to inspect local accounting firms – including member firms of the Big Four international accounting networks – citing national security concerns.
As of February, there were 156 Chinese companies placed on the NASDAQ and New York Stock Exchanges, according to government data, including at least 11 state-owned firms.
NYSE declined to comment on Friday while Nasdaq, MSCI, S&P, and FTSE Russell all did not quickly respond to calls for comment.
The White House has not had any discussions with the Chinese government over the limits U.S. Portfolio In China, said one person close to the administration. It also wants to keep any action isolated from the broader trade negotiations now underway, the person said.
But high on the list of U.S. concerns is the unusual influence the Chinese government has over private sector companies and restrictions Beijing places on the release of some financial information of even listed Chinese firms.
The fresh momentum behind the effort is partly due to a push from lawmakers to demand reciprocity with Beijing and a pending deadline for the government’s main retirement savings fund to channel billions of dollars into Chinese companies next year, according to several people involved in the discussions.
Over the past few months, US foreign relations with China have been particularly tense in terms of imports, exports and economic issues. As we reported a while ago, the Trump administration had a plan to put tariffs on Chinese goods, but investigations have shown that these tariffs cost for US consumers $1,000 a year.