China’s financial markets are drawing record high chunks of global capital particularly from U.S based investors during ongoing coronavirus pandemic and are continuously growing at high speed. As more money flows to China’s markets, its growing market power is gradually increasing China’s political power, giving China another potent weapon to challenge the United States’ position as the world’s financial superpower. As it is commonly said that China’s goal is “renminbi internationalization,”.
In fact, it is China’s long-term Strategy aimed at creating stable international monetary environment for its own economic development. China’s goal is creating such environment at international level, that all world populous, Chinese and non-Chinese alike use Ren Min Bi (RMB) for trade, lending, investing, borrowing and all kind of financial transactions can be materialized in RMB instead of US dollar. This financial supremacy will bring the Chinese Political supremacy at World stage. This was the Chinese well thought plan for which China was secretly working and it never sort to be involved in any controversy with any International players so its pace of economic development cannot hamper. China utilized all its resources to build its economy on strong and reliable foundations. It achieved excel in modern era technology and due to availability of cheaper manpower, most of the western big tech giants preferred to manufacture their products from Chinese market under their brand. Chinese tech market embraced all latest technologies including IT, Communication, military, automobiles, cell phone and computer production due to this market merger.
According to experts, China encouraged the foreign investors through provision of a favorble investment environment and opportunities to invest in mainland Chinese companies, government bonds and other securities to trade in renminbi China’s currency. The investors were incentivized to buy and hold the Chinees currency. Due to growing industrial based economy, and heavy investment in the country, the Chinese assets increased at high speed. As of 2020, the market capital of Chinese companies listed on mainland, Hong Kong and overseas indexes like the New York, London, and Singapore stock exchanges, totaled nearly $17 trillion, with the vast majority on mainland exchanges. That total rivals the combined market capital of the London Stock Exchange and the Euronext exchanges. As per data of Seafarer Inc. China has become one of the largest single-country exposures for US investors. Presently, China is both the second largest economy and the second largest capital market in the World. The Chinese capital market is growing at such as pace that it Will be able to gulp up the American financial market in coming decade. After revelation of this alarming situation, the US policy makers came into action and started formulation of policies to halt Chinese financial expansion and targeted Chinese big financial and tech Giants selectively. In first move to this end, the Trump administration banned US investors from owning shares in certain Chinese companies linked to the military and United States Congress passed legislation to delist Chinese firms from American Stock exchanges.
Presently, China is developing a digital Rin Min Bi (RMB), and the global payments system SWIFT, which is partnered with China’s central bank to help develop it. A digital RMB could speed the internationalization of China’s currency and expand Beijing’s geopolitical influence around the world.
After digitalization of renminbi (RMB) and imposition of restrictions on Chinese investors in USA, the volume of investment has increased in Chinese stock exchanges in Shanghai, Hong Kong, and Shenzhen. As per reports, the three Chinese stock exchanges claimed the first, third and fifth positions in the global IPO ranking by total funds raised in the first nine months of 2020.
According to Analysts, the combination of a more free-trading currency, higher government bond yields and the presence of world’s largest and most influential companies is expected to draw considerable funds to China from international investors in coming days. Due to this future scenario, US administration sorted to resist and halt this Chinese boost in tech, finance, trade, and investment realms at international level. United States is applying its weapon of sanctions against Chinese manufacturing and invest firms. Although, it is significantly offering hurdles in Chinese progress through its strategy but in reverse America also faces loss in certain aspects. In fact, two monsters are fighting in the ring and world is watching, who to win.
