Macroscope | Why Trump’s threat to cut China from US capital markets makes no sense

US President Donald Trump has taken the wrecking ball to US-China trade and now seems to believe he can aim it at US-China finance too, going by reports that the administration is considering delisting China-based companies in New York. But in attempting such far-out swings of the ball, he risks it crashing back into his cab and destroying the wrecker.

Any Trumpian move to exclude China from capital raising in US markets could well create a considerable boost in Chinese capital market activity – in Hong Kong especially (if and when civil society protests there die down).

This will be doubly true if the bid by Hong Kong Exchanges and Clearing to take over the London Stock Exchange succeeds, creating a powerful duopoly of stock-trading and capital-raising venues and leaving New York to rue any financial wall-building it undertakes.

His administration’s previous attacks on China’s Belt and Road Initiative have virtually ensured that New York would not get any significant share of the hundreds of billions of dollars the scheme is likely to need to raise.

This leaves Hong Kong and London as the obvious financing and capital-raising centres, as the Asian and European ends of the proposed belt and road infrastructure network, said Kent Calder, director of the Edwin O. Reischauer Centre for East Asian Studies in Washington and a vice-dean at Johns Hopkins University.