At the high point of Donald Trump’s relationship with Xi Jinping, when they met in Beijing three years ago, the Chinese president responded to his US counterpart’s pressure to liberalise financial services with a pledge: “We will never close our doors. They will only open wider and wider.”
Barely had Air Force One whisked Mr Trump from Beijing than, sure enough, China’s finance ministry announced sweeping reforms to remove ownership limits on foreign financial services companies operating in the country — much to the delight of Wall Street.
As the Financial Times series on the “New Cold War” outlined last week, US-China relations today look very different. A battle is being fought on many fronts between the world’s top two economies. Yet in the realm of finance, there is no evidence of relations breaking down.
JPMorgan is just completing the $1bn buyout of a joint venture partner in asset management to give it full control of China International Fund Management. The bank has also set in a train a process to take control of its Chinese securities and futures joint ventures. Goldman Sachs is meanwhile poised to buy out its securities joint venture partner, in a deal that could establish it as the first major fully foreign-owned investment bank allowed to operate in China.
If 2020 has been the year when Sino-American tensions escalated to resemble the 1980s stand-off between the US and the USSR, it has also been the year when Beijing — after 20 years of baby-step financial liberalisation — finally threw open its doors to Wall Street.
JPMorgan and Goldman are far from alone in winning greater control of their Chinese operations.