Biden also wants to continue to tackle China
During his reign in recent years, President Trump has taken a firm stance on trade with China. So much so that there was a real trade war between the United States and China. This war came ‘on hold’ for the time being with the trade agreement concluded at the beginning of this year (called Phase 1) in which the Chinese undertook to buy 200 billion American products this year and next year.
President-elect Joe Biden said in an interview with The New York Times that for the time being he will hold the Chinese to this trade agreement and will not relax the policy towards China. The speculation in the market that, at the beginning of his term of office, Biden would abolish the 25% import duty on almost half of all products imported from China is, in his view, based on nothing. For the time being, therefore, this levy will continue to apply. What he does want to do, however, is to stand up to China together with its American allies in Europe and Asia. Whereas Trump only sought confrontation with China, alienating his allies, which even led to trade disputes with those allies, Biden wants to jointly develop a coherent strategy to deal with China. He sees this intention as one of his priorities during the early weeks of his presidency.
Trump’s main motivation to deal with China was its large trade surplus with the United States. This fact, which has only increased despite the trade war, does not matter to Biden. He wants to focus more on China’s unfair competition because they sell products with government subsidies. American products cannot compete against these low prices. He also wants to crack down even harder on the Chinese theft of American technology. This is important because Biden wants to invest heavily in research and development, infrastructure, and education. And the results of this should not leak to China.
Meanwhile, Biden has another issue to resolve with China, and that is the ‘blacklist’ drawn up by the current Trump government. On this list are 31 (Chinese) companies in which Americans are no longer allowed to invest because these companies would have links with the Chinese army. Just before the inauguration of the new president, this boycott will enter into force.
Congress approves approach to Chinese stock market listings in the United States
Yesterday evening, the US House of Representatives approved a bill that puts at risk the listing of Chinese companies on US stock exchanges, such as Alibaba and Tencent. At the end of May this year, the Senate already agreed to the bill and it is now up to President Trump to sign it so that it will enter into force.
With the new law, the Americans want to allay their long-standing concerns about the reliability of China’s business figures. The law states that if Chinese companies wish to be listed on an American stock exchange, they will have to have their books audited by American accountants. This is not yet happening because the Chinese do not give their consent. The American auditors will have to guarantee that the companies comply with the ‘global standards’ and are not under the control of a foreign (Chinese) government. Companies will also be required to appoint a ‘special advisor’ who is familiar with the supervisory rules.
Fortunately, the problems that the new law raises for Chinese listings in the United States are not acute. The law provides for a habituation period of three years. If the new rules are not complied with for three years, penalties will follow, including delisting. The Chinese Government has indicated that it does not like the new legislation and therefore wants to enter into talks quickly in order to resolve this issue.