Why is Wall Street expanding in China?

IN THE TECHIPOIPO industry the rupture between China and America continues to grow. Will Uncle Sam force a sale of TikTok, a Chinese-run app popular in the West (see )? Can Huawei survive the embargo? Is Apple shifting its supply chains from China? Yet in one part of the global economy the pattern is of superpower engagement, not estrangement: high finance. BlackRock, a giant asset manager, has got the nod to set up a Chinese fund business. Vanguard, a rival, is shifting its Asian headquarters to Shanghai. JPMorgan Chase may spend $1bn to buy control of its Chinese money-management venture (see ). Foreign fund managers bought nearly $200bn of mainland Chinese shares and bonds in the past year. Far from short-term greed, Wall Street’s taste for China reflects a long-term bet that finance’s centre of gravity will shift east. And unlike in tech, both sides think they can capture the benefits of interaction without taking too much risk.Western, and in particular American, capital markets still reign supreme on most measures. Derivatives are often traded in Chicago; currencies in London. American firms dominate the league tables in asset management and investment banking. The White House has sought to weaponise America’s pre-eminence, by pushing Chinese firms to delist their shares from New York, for example. But if anything the trade war has shown the growing muscle of China in finance. A big wave of s is taking place in Hong Kong, often done by firms keen for an alternative to New York. China’s prowess in fintech will soon be centre-stage with the listing of Ant Group, which may be the world’s largest ever. And then there is the surprising rush of Wall Street firms and other foreign investors into mainland China.