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The White House is reportedly considering limits to US investment in China, including delisting Chinese firms from major exchanges

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yuan chinaREUTERS/Jon Woo

  • The Trump administration is considering limits to US investors’ flows into China, Bloomberg reported Friday.
  • The White House is weighting several options, including delisting Chinese companies from US stock exchanges and restricting Americans’ vulnerability to Chinese firms through pension funds.
  • It’s not yet certain how the government would roll out any of the plans.
  • US officials have not had any discussions with the Chinese government about the issue, and are looking to keep any actions separate from trade talks, according to Bloomberg.
  • Visit the Markets Insider homepage for more stories.

The Trump White House is considering limits to US investors’ flows into China, a move that threatens the fragile state of trade talks between the two nations, Bloomberg reported Friday.

The administration is considering several options for moving US capital out of China’s financial markets. The White House is reportedly concerned China has an unjust influence over private companies.

US officials have not had any discussions with the Chinese government about the issue, and are looking to keep any such action separate from trade negotiations, according to Bloomberg.

The possible actions include:

  • Delisting Chinese companies from US stock exchanges: The Nasdaq, New York Stock Exchange and NYSE American include 156 Chinese companies — 11 of which are state-owned — with a collective market cap of roughly $1.2 trillion as of February, according to the US-China Economic and Security Review Commission.
  • Restricting US investors’ exposure to Chinese firms through government pensions: Among the arguments raised by the administration is that some Chinese companies included in US pension funds pose national security risks, Bloomberg reported.
  • Enacting limits on Chinese companies included in indexes managed by US firms: More Chinese companies have been added to major US indexes in recent years, allowing more American investors than ever to easily back Chinese firms.

It’s not yet certain how the government would enact any of the plans, and any effort would need to be approved by President Trump.

Talks around such an effort are taking place as China is allowing greater foreign investment in its markets. The country removed a $300 billion limit on foreign purchases of Chinese stocks earlier in September in a bid to improve investment in domestic ventures. China has been grinding to its slowest levels of economic growth in decades as its manufacturing advantage loses ground to other nations.

China announced Thursday it will resume some purchases of American agriculture products including soybeans and pork. Trade deliberations between the US and China are slated to resume October 10.

The White House’s effort is reportedly being led by hawkish trade adviser Peter Navarro. The talks have included National Security Council officials and more dovish economic advisers, sources familiar with the discussions told Bloomberg.

Read more: The chief strategist at a $1 trillion investing giant says Trump is doomed to lose his trade war — and explains why that would be the best possible outcome for markets

The White House is reportedly discussing the plans with Senator Marco Rubio, one of Congress’ most outspoken critics of US investment in China. The Florida Republican has led efforts to restrain investment in Chinese firms and raise the bar of entry for Chinese companies seeking inclusion in US indexes and pensions.

“This administration deserves credit for their efforts to deal with the threat that the Chinese government and Communist Party poses to U.S. national and economic security, including how Beijing takes advantage of its access to U.S. capital markets for predatory purposes,” Rubio told Bloomberg.

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