White House weighs limits on US portfolio flows into China

Trump administration officials are discussing ways to limit U.S. investors’ portfolio flows into China, a move that would have repercussions for billions of dollars in investment pegged to major indexes, according to people familiar with the internal deliberations.

The discussions are occurring as Washington and Beijing negotiate a potential truce in their trade war that’s rattled the world’s two biggest economies and investors for more than a year. They also come as China is removing limits on foreign investment in its financial markets. A U.S. crackdown on capital flows would therefore expose a new pressure point in the economic dispute and cause disruption well beyond the hundreds of billions in tariffs the two sides have levied against each other.

Among the options the Trump administration is considering: delisting Chinese companies from U.S. stock exchanges and limiting Americans’ exposure to the Chinese market through government pension funds. Exact mechanisms for how to do so have not yet been worked out and any plan is subject to approval by President Donald Trump, who has given the green light to the discussion, according to one person close to the deliberations.

Trump officials are also examining how the U.S. could put limits on the Chinese companies included in stock indexes managed by U.S. firms, three of the people said, although it’s not clear how that would be done. More Chinese companies in recent years have been added to major indexes that a broad array of investors have access to.

https://www.msn.com/en-us/money/markets/white-house-weighs-limits-on-us-portfolio-flows-into-china/ar-AAHWvdy?li=BBnbfcN