President Donald Trump's trade war with China has prompted a broad rethinking of how the two economies have become so intertwined, leading some manufacturers to trim supply chains in China and American authorities to start cutting off crucial technology for Chinese companies.
Now another important area is getting a close look: financial markets.
Some trade experts and others urging the Trump administration to keep a hawkish stance are discussing whether the White House should curb China's access to Wall Street. Chinese companies have raised tens of billions of dollars through American financial markets in recent years.
Steve Bannon, Trump's former chief strategist, said there were continuing efforts inside and outside the administration to rethink China's role in American stock markets, in part because of a lack of transparency about the ultimate owners of Chinese companies.
"The New York Stock Exchange and Nasdaq are breaching their fiduciary responsibility to institutional investors, the pension funds of hardworking Americans," Bannon said. "It's outrageous. All of it should be shut down immediately."
Adding fuel to the discussion, Alibaba, the Chinese e-commerce giant that held a hugely successful initial public offering in New York five years ago, is now considering also listing its shares in the semiautonomous Chinese city of Hong Kong, according to a person familiar with the matter. The person, who asked for anonymity because the discussions were not public, said the move was not under consideration because of geopolitical worries.
As the United States ramps up other barriers to trade, the outlook for the financial sector on both sides of the Pacific is starting to change, part of a broader decoupling between the two economies.
"There are growing calls on the US side for complete decoupling, which is causing Chinese enterprises to re-evaluate their reliance not just on US technology but also on other US resources, including financial markets," said Andy Mok, a senior fellow at the Center for China and Globalisation, a leading research group in Beijing.
China has long considered Wall Street an ally.
In the late 1990s, Beijing appealed to senior financial executives to lobby the Clinton administration to allow it to join the World Trade Organisation, the club of nations that sets global trade rules. Senior executives of major firms like Goldman Sachs and the Blackstone Group often meet with top Chinese leaders. They have also acted as go-betweens, counseling Trump administration officials on how the trade war is being received both in China and on Wall Street.
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Big banks see the fast-growing country as an important source of business, even if they have largely been blocked from competing in China's tightly controlled financial system. Chinese companies have raised tens of billions of dollars through American financial markets in recent years. Wall Street banks have earned big fees from advising Chinese businesses on initial public offerings and on acquisitions of American businesses and real estate.
"China is full of amazing entrepreneurs whom we look forward to welcoming," said Robert H. McCooey Jr., a senior vice president of listing services at Nasdaq.
The Trump administration hasn't announced any moves to cut off China, and Chinese companies continue to enjoy access to American markets. Just two weeks ago, Luckin Coffee, a Chinese competitor to Starbucks, surged in its trading debut in New York, though its shares have since traded lower.
But skepticism is growing among some administration officials and legislators about the presence of Chinese companies on American capital markets and in major stock indexes.
In a letter in April, a bipartisan group of senators including Marco Rubio, R-Fla., urged the administration to increase disclosure requirements for Chinese companies listed in the United States that pose national security risks or are complicit in human rights abuses.
The letter named HikVision, which the Trump administration is considering blocking from purchasing America components over its role in the surveillance and mass detention of Uighurs, a mostly Muslim ethnic minority. HikVision is a component of MSCI stock indexes, and its investors have included UBS, JPMorgan, and the public pension funds of teachers in California and New York.
"Americans would likely be very troubled, if not outraged, to learn that their retirement and other investment dollars are funding Chinese companies with links to the Chinese government's security apparatus and malevolent behavior," the letter read.
It's not clear how much credence such ideas have with the president and his current advisers. But if Washington did act, China has its own way to strike back.
Chinese entities, mainly the country's central bank and sovereign wealth fund, own at least US$200 billion ($305.5b) in shares in the United States, by one estimate, giving Beijing a possible additional weapon should Chinese leaders decide to sell. China's economic policymakers are aware of that extreme option, people familiar with the policymaking said. They insisted on anonymity because of the political and diplomatic sensitivity of the issue.
Such a move could shake the American stock market, which Trump considers a barometer of his success. For many years, policymakers, economists and bankers have asked what might happen to the US economy should China suddenly dump much of the US$1.3 trillion it holds in United States debt.
Selling stocks could be more potent than paring back bonds. Stock markets tend to respond to smaller sums of money than US government bonds do because the market for Treasury bills is simply so big.
China is unlikely to dump shares quickly, said Mark Sobel, a former longtime Treasury official who is now the US chairman of the London-based Official Monetary and Financial Institutions Forum. Doing so not only would upset the United States but also could mean selling shares at a loss during a temporary dip in prices, which would hurt the investment return on China's assets.
"In my experience, China's reserve managers have always acted in a professional manner and sought to promote financial stability," Sobel wrote in an email.
In the past, Chinese government agencies have quietly and gradually sold part of their American stock holdings when they have needed extra dollars to help manage the value of the currency, said Brad Setser, an economist at the Council on Foreign Relations in New York.
Chinese firms that start changing their relationship with American financial markets now face questions over whether their moves are trade related.
Shanghai-based Semiconductor Manufacturing International Corp., a computer chipmaker traded mostly in Hong Kong, is shifting the trading of its American depositary shares from the New York Stock Exchange to the far less visible over-the-counter market. SMIC, as it is known, attributed the decision to low trading volume in its shares in New York.
"SMIC has been considering this migration for a long time, and it has nothing to do with the trade war" or with the trans-Pacific dispute over Huawei, a Chinese tech company, SMIC said in a statement in response to questions. "The migration requires a long preparation, and timing has coincided with the current trade rhetoric, which may lead to misconceptions."
Alibaba has long discussed selling its shares in mainland China or Hong Kong, so it is not clear what role, if any, the trade war had in its considerations. Jack Ma, the co-founder of Alibaba, had said at a conference in January last year that he would consider whether to do another stock listing in Hong Kong.
For Alibaba, a Hong Kong share sale could allow more Chinese investors to put their money in a company that many of them use in their daily lives. Alibaba's stepped-up discussions over listing in Hong Kong were reported earlier by Bloomberg.
With the trade war going on, Mok, at the Beijing research group, said Chinese companies were now more likely to think twice about depending on American financial markets.
"There is no desire on the Chinese side for decoupling," he said, "but it is maybe a prudent management decision to reduce risk exposure."
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Written by: Keith Bradsher and Ana Swanson
Photographs by: Todd Heisler
© 2019 THE NEW YORK TIMES