Recently, Donald Trump ordered the US government to cease the federal employee retirement fund from investing in Chinese equities as a response to China’s ill-handling of the spread of the coronavirus. As if that hasn’t escalated the thin-ice tensions between the country’s enough, now a spokesperson for the Chinese foreign ministry has issued a statement in response.
Although Chinese officials have been anticipating the ongoing trade war between the two countries to resort to this extent, Donald Trump’s move is most likely going to negatively impact its own investment community. According to Zhao Lijian, the Chinese foreign ministry spokesperson, capital markets in China are advantageous for US investors, and barring them from accessing the Chinese market will only result in missed opportunities.
It is worth noting that even at the height of the coronavirus pandemic in China, foreign investors were far from deterred, and instead continued to pour $10.7 billion into the country’s $13 trillion bond market. Thus, if Donald Trump’s hot-headed demand to curtail Chinese equity investments is conceded, not only will he most likely have a pack of furious US investors knocking on his door, but the Phase One trade deal may also be jeopardized.
Information for this briefing was found via the Financial Times and Trading Economics. The author has no securities or affiliations with any of the mentioned securities. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.