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ASA Opinion: Wall Street's Cozy China Ties

Only a bipartisan Washington can force Wall Street to stop funding the Chinese Communist Party.

By Christopher A. Iacovella If there’s one area of bipartisan agreement, it’s that the Chinese Communist Party (CCP) presents a grave threat to the free world and our way of life. So why is Wall Street still financing Beijing’s authoritarian ambitions—with investor money from Main Street America?


For decades, Beijing has used Wall Street’s insatiable appetite for profit to infiltrate our capital markets and fund the build-up of its economic and military power. In exchange, Wall Street receives huge fees and access to the Chinese market. This coercive quid pro quo threatens our economic and national security and harms America’s working families, savers, and retirees.

The scale of this cozy relationship—and how it was built—is staggering. CCP-controlled Chinese companies have accessed billions of U.S. investor dollars under false pretenses for years. Between 2009 and 2012, for instance, numerous Chinese companies executed reverse mergers into dormant companies listed on U.S. exchanges, and almost all of them were frauds that left American investors with heavy losses.

Then in 2013, the CCP persuaded high-level American officials to give Chinese companies a “free pass” from Sarbanes-Oxley rules enacted after the Enron and WorldCom frauds. More recently, the CCP pressured Wall Street to include Chinese companies in international and emerging market index funds, which allows them to completely avoid our company-specific disclosure and reporting obligations.

This special treatment creates real risks for investors. Last year, Luckin Coffee—the so-called Starbucks of China—saw its stock drop over 80 percent as investors learned of fabricated sales and shoddy accounting. Two years ago, Kangmei Pharmaceutical, a Chinese company included in multiple index funds, perpetrated a “premeditated and malicious cheating of investors” when over $4.4 billion in cash suddenly went missing. These are a few examples of the purposeful and deliberate fraud the CCP has perpetrated on the American investing public with Wall Street’s help.

And if the risk of fraud weren’t bad enough, a number of CCP-controlled companies listed on American exchanges and included in index funds are also on the U.S. government Entity List and OFAC Sanctions List. To get on these lists, a company must be “acting contrary to the national security or foreign policy interests of the United States” or “a threat to the national security, foreign policy, or economy of the U.S.”

Despite all of that, Wall Street remains undeterred.

Since modern-day China operates as a “Party-State,” funds that flow to Chinese industry can’t be separated from those supporting the CCP. In other words, there’s no way to distinguish the funds raised in U.S. capital markets from those used by the CCP to underwrite gross human rights abuses and other activities that shock the conscience.

Wall Street can’t say whether the funds it directs to the CCP are used for forced labor, the ongoing internment of Uyghurs in concentration camps, the emission of more greenhouse gases than all developed countries combined, the buildup of the People’s Liberation Army, or the support of a cyber-army that relentlessly attacks the United States and other nations of the free world.

Yet, despite it being so outspoken on environmental and social issues here, Wall Street’s virtue-signaling seems to end at the water’s edge. It hasn’t stopped doing business with or divested its portfolios of any security subject to communist China’s repressive regime. So it appears that no matter what the moral cost, Wall Street will work with the CCP.

Until this changes, the CCP will persist in dumping its companies into our markets with Wall Street’s help. This means the CCP will continue to use our money to fund unspeakable atrocities, the destruction of the environment, an increasingly belligerent military, and a disinformation campaign that undermines American values.

While the free flow of capital shouldn’t be impeded, communist China’s threat to humanity, the environment, investors, and our national security trump this maxim.

The Biden administration recognizes this, recently warning that “China’s leaders seek unfair advantages, behave aggressively and coercively, and undermine the rules and values at the heart of an open and stable international system.”

To counter the CCP threat, we need a whole-of-government approach that prioritizes the interests of the United States. It starts with a “Buy America” policy that steers American dollars away from communist China and toward American companies, so jobs can be created here.

This also means that to protect America’s mom-and-pop investors, the integrity of our markets, and every American, the CCP’s access to the U.S. capital markets must end.

Earlier this month, President Joe Biden signed an executive order to start that process. The order bans 59 CCP-controlled companies from our markets, and it warns Wall Street and the CCP that “any conspiracy formed to violate any prohibition in the order is prohibited.”

Only a bipartisan Washington can force Wall Street to stop funding the Chinese Communist Party.

Chris Iacovella is the CEO of the American Securities Association. To read this Op-Ed at The Epoch Times, click here.


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