Is the U.S. Arming an Adversary, China, Intent on Overpowering Us?
by Peter Schweizer • February 26, 2021 at 5:00 am
China's greatest financial weakness remains its continued dependence on Western capital markets, crucial for a growing economy.... To grow, China depends on massive inflows of capital that surge through the capital markets based in the U.S. The Trump administration made several moves during its term to delist Chinese companies that are not forthcoming about who really owns them and what businesses they are really engaged in.
[S]ince 2013, Chinese state-owned enterprises have enjoyed exemptions from Sarbanes-Oxley and other regulatory requirements that also force greater transparency from these companies. They were the only ones granted these exemptions while still being listed on New York stock markets. What if those exemptions were removed?
The only relevant screening in the US happens through the same government body that approved the sale of Uranium One to Russian government-backed investors, called the Committee on Foreign Investment in the United States.
Yet, U.S. capital markets currently have no such insulation. So we have capital markets which freely trade the shares of companies that have violated international sanctions, sold America's adversaries advanced ballistic missiles, armed the PLA, and helped militarize the fabricated new islands in the South China Sea. These companies freely receive investment dollars from ordinary Americans saving for their retirement, unaware of their real activities and ownership.
This January, the New York Stock Exchange began the process of delisting three Chinese telecom companies.... The administration said the three firms are owned or controlled by China's military.
No one wants to damage the investment portfolios of American retirement savers. But the dark side of this exposure is what may become of U.S. resolve to stand up to Beijing if 180 million Americans realize that up to 20% of their retirement funds are locked into Chinese securities. These Americans would suddenly have a personal, vested interest in opposing any future sanctions or other penalties against China, regardless of the geopolitical sense or national security implications. That prospect should encourage Congress to move sooner rather than later.
President Ronald Reagan knew the weaknesses of the Soviet Union. Unlike his predecessors, he did not focus on countering their strengths, but by exploiting those problems of life under a Marxist-Leninist regime that were impossible for them to fix. Reagan's policies targeted many weaknesses – religious, political, military, and cultural among them – but his focus on Russia's economic problems exposed those other weaknesses by choking the regime's ability even to throw money at other problems.
Today, the most pressing threats do not come from Russia. They come from the growing power exerted by China. So, the question becomes: Can we apply these today lessons to China? With the massive, worldwide reach of China, its economic power and military build-up combine to pose strategic threats to the U.S. and the free world. Reagan's strategy, however, can counter these threats and reduce others posed by the Chinese dragon.
