In early May, President Donald Trump ordered a federal retirement fund to scrap its plans to shift several billion dollars’ worth of U.S. government employee savings into Chinese stocks. The administration is now planning a broader review of China’s unfair and potentially dangerous usage of American capital markets. This is about far more than mundane matters of bureaucracy and asset allocation. It epitomizes the existential battle facing America.
Our public servants will now no longer be underwriting military contractors that support the Communist Party of China’s (CPC) People’s Liberation Army—
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the fact that these travesties would have transpired had the Trump administration not intervened is a sobering truth with implications that transcend capital markets. It touches on the long-term competition into which America has finally entered with the People’s Republic of China (PRC). Near-term, the 2020 election is critical to sustaining this competition.
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It was the Obama Administration—during much of which then-Vice President Biden managed the “China portfolio,” explicitly engaging the then-general secretary-in-waiting Xi Jinping—that was responsible for the plan which would have seen U.S. government employees fund their foes. Every member of the Federal Retirement Thrift Investment Board (FRTIB) responsible for the 2017 decision to tilt its Thrift Savings Plan’s (TSP) international fund toward Chinese equities, was an Obama appointee. They pressed ahead with the plan in spite of withering bipartisan criticism.
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In 2013, China faced the prospect of seeing its companies deregistered from U.S. exchanges on a massive scale due to their unique non-compliance with basic standards of transparency and accountability. The Obama Administration gave China a lifeline in the way of a me
dum of understanding (MOU), inked with its regulatory authorities, purportedly intended to make progress toward closing these gaps.
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Today, seven years after the MOU went into effect, Chinese companies continue to get de facto preferential treatment in U.S. capital markets by skirting auditing and reporting requirements.
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To rectify the Obama Administration’s folly, Senator John Kennedy (R-LA) introduced legislation, which the Senate recently passed unanimously, that would force Chinese companies to comply with our securities rules and regulations or risk de-listing from our exchanges. Congress is now being joined by the Trump Administration, which again is undertaking its own review.
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America granted China entry into the world economic architecture it largely built and maintained. China responded to our benevolence not by conforming to the “liberal international order” but by taking advantage of it—lying, cheating, stealing, and increasingly coercing in its quest for dominance. As American corporations kowtow to China, and American media propagates CPC narratives, it would seem the globalist elites who encouraged this policy had it backwards. We have not changed China. China has changed us.
Wall Street was the leading edge of the globalist business community’s decades-long lobby to permit a China trade that promised great fortunes in access to a market of more than one billion Chinese citizens, and a labor pool unencumbered by American standards. For at least two decades, Beijing has courted senior American financial executives to press U.S. presidential administrations for greater trade liberalization, while said executives’ banks have received massive underwriting and advisory fees relating to Chinese commerce.
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Biden arrived in Washington, D.C. a year after Nixon went to China. He sat on the Senate Foreign Relations Committee for three decades, serving as chair or ranking member from 1997 onwards. If any political figure outside of the Oval Office could have helped change the course of U.S.-China relations, it would have been the senator from Delaware. Yet during his long career, covering practically the entire arc of the U.S.-PRC relationship, there is virtually zero evidence that he ever opposed the effort to propel China to prominence. Today, as a direct consequence of this neglect, China could sneeze and the world would end up paralyzed.
Indeed, Biden has been a reliable proponent of not just PRC integration, but ascendance. Reminiscing about his participation in a 1979 delegation to visit Deng Xiaoping months after the U.S. and PRC had normalized relations, then-V.P. Biden stated in May 2011 at the U.S.-China Strategic & Economic Dialogue that
“as a young member of a Foreign Relations Committee, I wrote and I said and I believed then what I believe now: that a rising China is a positive, positive development, not only for China but for America and the world writ large.”
He has never renounced this statement...
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