China must reform financial markets to ward off US financial sanctions, think tank urges

China Finance 40 Forum group of senior Chinese regulatory officials and financial experts call for more cooperation with United States to avoid escalation of bilateral conflict

Bigger, more open financial markets would attract foreign investors, blunting US efforts to sanction China financially, group says

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Some Chinese economists say that, under the current strained bilateral relations between China and the US, Beijing should strive to build “a super-large financial market” to help prevent financial decoupling. Photo: Reuters

Published: 6:00am, 1 Sep 2020Updated: 3:44pm, 1 Sep 2020

China should make its own financial markets big enough and open enough to foil any attempt by the United States to decouple financially, according to a semi-official Chinese research group.

The tactics suggested in a report released on Sunday by the China Finance 40 Forum (CF40), a think tank comprising senior Chinese regulatory officials and financial experts, comes amid worries that the United States will expand the conflict between the world’s two largest economies beyond the trade war and efforts to restrain China’s technological development in the name of national security.

“[We] must firmly oppose and properly handle the United States’ long-arm jurisdiction [of applying US law outside its borders] and financial sanctions, and in the meantime make contingency plans against extreme conditions,” according to a report excerpt released on the group’s social media account.

The Beijing-based organisation has links with Wall Street banks and American think tanks, and it has served as an important platform for dialogue about ongoing trade tensions. For instance, its delegation paid visits in November to the Office of the US Trade Representative and the US Department of Commerce in Washington after bilateral trade talks stalled, and tried to rally American support for an online seminar with the Peterson Institute for International Economics in April.

The just-released report highlights the latest efforts by Beijing to keep bilateral relations from deteriorating further in the run-up to the US presidential election on November 3.