Financial strategist Roger Robinson warned in Washington last week that penetration of U.S. capital markets by Chinese companies pose a serious threat to the financial sector. This will be the next big issue in U.S.-China economic relations, he said.
“What is the next big issue in U.S.-China economic relations?” he asked at the Committee on the Present Danger: China Briefs New York Business and Financial Sector on PRC ‘Unrestricted Warfare. “The answer is: An evolving new U.S. attitude toward China’s access to and penetration of the U.S. capital markets.”
Now the president of the Prague Security Studies Institute, Robinson also helped President Reagan in the 1970s to design the economic and financial strategy for the take-down of the Soviet Union.
He warned about the threat Chinese companies pose to the U.S. capital market. There are over 650 Chinese companies in the market, he said, and more than 500 of them are in the over-the-counter market because it is the least regulated and popular with companies that want to circumvent transparency and disclosure requirements.
“Many of them would be seen, politely put, as high-risk entities; less politely put, they are outright bad actors. and I am talking about national security abusers of all stripes, as well as human rights abusers,” he said.
Companies like Hikvision, China Unicom, and China Shipbuilding Industry Corporation are key contractors for the Chinese communist army, and are also listed on the U.S. stock market. Some companies, such as Hikvision, have been accused of engaging in human rights violations committed by the Chinese Communist Party.
The economic scale of these companies together nears trillions of dollars.
Robert Spalding, former Senior Director of Strategic Planning at the National Security Council, said growth into the U.S. market was intentional and planned. “What happened was China understood if it could incentivize corporate behavior around its own national interest, then it could beat the U.S. at its own game,” he said.
American investors, including many American pension portfolios, have invested in these companies, providing financial backing for their operations. And some U.S. politicians, such as Congressman Hon. Scott Perry, are sounding the alarm.
“Look, America has to wake up on a lot of different levels, and I don’t know what it takes, but I certainly hope that we don’t wait too long, and I hope it doesn’t take something horrific,” he said.