Trade War Has Caught Wall Street Between A Rock And A Hard Place

2025-04-17 07:01:11

(MENAFN- Asia Times) The trade war between China and the US has spiraled into uncharted territory . On April 10, the Trump administration imposed a tariff of 125% on all Chinese imports. China called the actions unfair and responded with similar measures.

Within the broader debate around unravelling economic ties between the US and China, where economic interdependence has increasingly been viewed as a threat to US national security, this escalation raises questions about whether global finance is also reducing its presence in China.

After all, the risks of financial connectivity with China have been discussed prominently by US policymakers in recent years. And many financial analysts have spent much of the past year discussing whether China has become “uninvestable” due to rising geopolitical tensions.

However, as I show in a recently published study , most global financial firms have continued to expand their presence in Chinese markets over the last decade, even as tensions have intensified.

Crucially, they have done so on China's terms, operating within a system that prioritizes government oversight and policy goals over liberal market norms. This pragmatic accommodation is quietly reshaping the global financial order.

China's capital markets, which have historically been sealed off from the rest of the world, have been opening up in recent decades. This has prompted global financial firms to expand their footprint in China.

Investment banks such as Goldman Sachs and JP Morgan have taken full ownership of local joint ventures. And asset managers like BlackRock or Invesco have established fund management operations on the Chinese mainland.

Yet China has not liberalized in the way many in the west expected. Rather than conforming to global norms of open, lightly regulated markets, China's financial system remains largely guided by the state .

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