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Congress Urges Wall Street to Reduce China investments

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The United States has long been a beacon of capitalism and free trade. These principles have not only led to prosperity at home but have also positioned America as an influential economic leader globally. However, as global dynamics shift, there’s a growing consensus that it’s crucial for the U.S. to carefully scrutinize its economic relationships. At the heart of this reevaluation is China.

Recently, politicians from Washington turned their attention to Wall Street, urging them to reconsider their investments in China. They believe that these financial ties, rooted in the pursuit of profit, might be compromising U.S. national security. With China identified as America’s primary adversary, concerns arise when U.S. financial avenues inadvertently fund China’s technological and military advancements.

Congressman Mike Gallagher commented during a recent public hearing, “They put on their golden blindfolds and chase a yield that never comes.” He’s highlighting the belief that Wall Street is too enticed by potential profits, overlooking the bigger picture.

The gravity of the situation can be understood by looking at the numbers. As of the end of 2020, U.S. investors held $1.1 trillion in Chinese equity and an additional $100 billion in Chinese bonds. These investments exceed the direct U.S. investment in China, estimated at $285 billion over three decades.

While some might argue that these numbers reflect a healthy trade relationship, Washington is apprehensive. If tensions escalate, the deep economic ties between the U.S. and China could lead to substantial systemic impacts in America. In such a scenario, the U.S. could find itself excessively reliant on China for critical resources like pharmaceutical compounds and specialty metals.

These concerns aren’t unfounded. The U.S. government already prevents Americans from doing business with numerous Chinese firms suspected of military affiliations or accused of human rights violations. Furthering this defensive stance, last month, President Biden signed an executive order restricting U.S. investments in certain Chinese technologies, primarily in the advanced semiconductor and quantum computing sectors.

In light of these measures, Gallagher suggests that the current strategy lacks comprehensiveness. He’s pushing for legislation that targets U.S. investments in publicly traded stocks and bonds of those Chinese companies that the U.S. already opposes. His stance receives support from his colleague, Krishnamoorthi, who feels that any blacklisted entity should be out of bounds for U.S. investors.

The urgency to protect national interests is further evident in the tech sector. Recently, senior U.S. House Republicans called for stricter measures against Chinese tech giants Huawei and SMIC. These companies have been under scrutiny due to security concerns, and recent developments hint at technological advancements that could further threaten U.S. interests.

Huawei, for instance, introduced a phone with a chip that many believe showcases a significant tech breakthrough by SMIC. Both companies have faced trade restrictions due to national security concerns, but reports indicate they’ve still managed to conduct billion-dollar trades with U.S. companies.

To say that America’s relationship with China is complex would be an understatement. As economic ties deepen, so do the challenges and risks associated with them. It’s crucial for the U.S. to strike a balance between economic interests and national security. The recent actions and sentiments from Washington signal a country that is intent on safeguarding its future, even if it means redefining long-established economic relationships.

China has shown its stripes over and over again. When someone says they are coming to get you, believe them.

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