The economy of the Sino–US conflict: its impact on Chinese firms listed in the US and Hong Kong as a financial hub

ABSTRACT

The US is currently pursuing a cold war strategy against China, having initiated a trade war and delisted Chinese companies to restrict China’s development. Although China interacts with other countries through foreign direct investment, it prevents the circulation of speculative monies from the international market by enclosing its national capital account. As many Chinese companies have a variable interest entity structure, their delisting from the US will motivate relisting in Hong Kong. The US and China need to conceive a coevolution strategy to generate a better world.

KEYWORDS:

• Hong kong
• offensive realism
• Sino–US relation
• stock delisting
• structural realism
• variable interest entity

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1. The GDPs of China and the US are tabulated in Appendix B.

2. Felipe, Kumar, and Galope (2017) define four income-tied systems in terms of GDP per capita in 1990 PPP dollars: low-income (below US$2,000), lower-middle-income (between US$2,000 and US$7,250), upper-middle-income (between US$7,250 and US$11,750) and high-income (above US$11,750).

3. See the press release on 11 December 2017, for Henry Paulson’s opening statement at the meeting of the US China Strategic Economic Dialogue at http://www.ustreas.gov/press/releases/hp727.htm. NYSE, Nasdaq and London AIM have conducted many promotional tours to China over the past few years.

4. ADRs are negotiable certificates issued by a US bank or trust company. They represent an ownership interest in a foreign private issuer’s securities deposited, usually outside the US, with a financial institution as the depositary. The underlying securities represented by ADRs may be either debt or, more commonly, equity instruments (Saunders 1993). ADRs carry corporate and economic rights such as dividend and voting rights of its underlying share (Boubakri, Cosset, and Samet 2010).

5. ‘A contract is invalid under any of the following circumstances … (3) there is an attempt to conceal illegal goals under the disguise of legitimate forms; or … (5) mandatory provisions of laws and administrative regulations are violated’. Zhonghua Renmin Gongheguo Hetongfa (中华人民共和国合同法) [Contract Law of the People’s Republic of China] (promulgated by the Standing Comm. National People’s Congress, 15 March 1999, effective 1 October 1999), Article 52(3), (5) (1999), http://www.npc.gov.cn/englishnpc/Law/2007-12/11/content_1383564.htm [hereafter Contract Law of China].

6. As of 27 March 2022, US$1= HK$7.83.

Additional information

Notes on contributors

T. K. P. Leung

T.K.P. Leung is Associate Dean of the School of Business and Associate Professor at the Hang Seng University of Hong Kong. He had more than 11 years of executive experience in international companies specializing in industrial and consumer products before becoming an academic in 1991. His primary research interests are Sino–US trade negotiations and conflict management, business-to-business marketing, cultural and ethics marketing and brand management. He has published two research books in addition to over 100 journal articles and book chapters. His work is widely cited and has appeared in Industrial Marketing Management, Decision Support Systems, International Journal of Production Economics, Journal of Business Ethics, European Journal of Marketing and Asia Pacific Business Review, among others.

Lawrence H. W. Lei

Lawrence H.W. Lei is currently an Assistant Professor at the Hang Seng University of Hong Kong. He was an auditor at PricewaterhouseCoopers and internal auditor and gaming analyst at two major casino resorts in Macau SAR, where he developed a strong interest in corporate governance before becoming an academic in 2014. He is Director of the Start-Up and SME Resource Center, Chief Editor of the HSUHK Business Review and an executive member of the Junzi (a Chinese gentleman) Ceremony Organising Committee, which annually presents awards to organizations with good ethical practices. His work has appeared in the Asian Journal of Business Ethics, Journal of International Banking Law and Regulation, UNLV’s Gaming Research and Review Journal and International Journal of Law and Management.