Chinese Policies Put Squeeze on the Banks

Whether US investment banks and private-equity firms can continue global financial domination depends on their success in Asia, particularly China, contends Steven M. Davidoff in the New York Times. Globalization was historically good for Wall Street’s financial firms, but now to prosper they must pursue business in Asia. He identifies a major shortcoming for US firms – not competing “at all for Chinese companies raising money domestically.” Davidoff surmises that this could largely be due to Chinese exclusionary policies. “The Chinese government is thus doing in investment banking what it is doing in other industries,” he writes. “It is strong-arming foreign investment banks to provide capital and expertise as a bridge to building a bigger market share for domestic players.” US firms comply with the conditions, and Chinese investment banks and private equity firms are growing rapidly and increasing their market share. Wall Street could be in for a fight to preserve its global position. A short-term quest for growth by US financiers could create powerful long-term competitors. – YaleGlobal