The conclusion of the US-China audit oversight cooperation agreement shows the original intent of Chinese companies to go global has not changed.
While professionals on both sides view the agreement with cautious optimism, the agreement reveals a message worthy of attention by US policymakers.
It is a strong rebuttal to the insistence of some in Washington on characterizing China as a “challenger to the world order,” a force that seeks to replace or defeat the US on a global scale. In perceiving such, Washington has adopted a zero-sum strategy in the attempt to contain China.
There will be many challenges in the implementation of the agreement, but China’s willingness to reach this agreement with the US means that China’s relationship with the existing world economic, trade and financial systems remains the same as ever before – promoting China’s development through cooperation and coordination, while at the same time, improving the systems’ inclusiveness and fairness.
China is a constructive force, not a subversive force, let alone a force to set up another house. The US stock market is the most mature and internationalized market in the world and the dominant force in the world’s financial markets. US stocks make up approximately 59.9 percent of global equity market capitalization.
Chinese companies going public overseas have become a newly emerging capital force. As of March this year, 261 Chinese companies were listed in the US, with a total market capitalization of about $1.3 trillion, which is directly related to the interests of US and global investors. Therefore, this agreement is beneficial to both China and the US.
Since the US stock market is more like a global market, then its rules represent the global rules to some extent. The development of Chinese companies in this market is also the inevitable course of their internationalization.
By the same token, since reform and opening-up commenced, China has joined many trade and financial systems and entered global markets with made-in-China following international standards, including the US market.
Chinese companies have complied with the rules of these systems and markets and China’s entry has also made these systems more inclusive, making the order more equitable and stable under globalization.
After the outbreak of the Russia-Ukraine conflict, forces in the US and the West have deliberately classified China as being in the same category as Russia, using ideological differences to position China and trying to push it to the opposite side of the so-called world order.
One of the major differences between Russia and China is that Russia is not fully integrated into the existing world economic, trade and financial system, although attempts were made.
After the end of World War II, then US president Franklin D. Roosevelt invited the Soviet Union to join the three newly created international institutions: the International Monetary Fund, the World Bank, and the United Nations.
Joseph Stalin chose only the United Nations, both because the Soviet Union could be a founding member and because it had veto power in the Security Council. Stalin refused to participate in the IMF and the World Bank as the Soviet Union would prefer to construct similar systems dominated by itself.
After the dissolution of the Soviet Union, there was also a tendency to integrate Russia into the global system for some time, but ultimately Russia was unable to align itself with these systems. One of the reasons for the Russia-Ukraine conflict was Russia is unable to integrate into the West-led order where it can only be a follower, while at the same time feeling increasing pressure that forces it to become a follower.
Since reform and opening-up, China has successfully integrated into the global system, including the IMF and World Bank, as well as the WTO, and has been a positive force in driving the continued development of these systems.
The listing of Chinese companies in the US is also an inevitable part of China’s development and is conducive to enhancing the internationalization of the US stock market.
If the world order and system, as the Americans and the West call it, cannot offer enough room for China and the US to dance together, cannot accommodate the growth of Chinese companies and the rise of China’s capital power, it only means that it is this order and system that needs to be improved. Squeezing and rejecting China, a peacefully rising country, as the antithesis of the system will only cause the system to divide and disintegrate.
The writer is a senior editor with People’s Daily, and currently a senior fellow with the Chongyang Institute for Financial Studies at Renmin University of China