US-China Financial Ties: Deeply Entangled Despite Rivalry

As the United States marks the 250th anniversary of its founding, it confronts a new world order dominated by its relationship with China. In this wide-ranging series, we examine the pressure points and possibilities in those ties, from hard tech to soft power. In this article, Sylvia Ma examines the numerous financial links between the two economies that make a true decoupling a difficult affair.

But the Wall Street veteran noticed an issue. The share certificate, with a face value of 50 yuan when it was presented in a ceremony at the Great Hall of the People, was not registered in his name, but that of a Chinese bank official.

Eager to own the Chinese share certificate under his own name, Phelan – then chairman of the world’s largest stock exchange – flew with his delegation to Shanghai, where he had the ownership formally transferred at a tiny trading counter, a full four years before the city would open its stock exchange.

Now, as the United States marks 250 years since the signing of its Declaration of Independence, America remains home to the world’s largest stock market, while China’s own capital market has grown dramatically in scale – becoming the world’s second largest by total market capitalisation.

But the two countries’ former embrace of economic ties has given way to an era of strategic rivalry. As Washington busied itself erecting limits to cross-border capital flows, Beijing has fortified its financial moats by building alternative payment systems and diversifying away from the US dollar.

However, experts said the underlying financial plumbing between the world’s two largest economies remained too deeply entangled.