Wall Street, China to Revive Talks in Hunt for Common Ground

(Bloomberg) -- A contingent of Wall Street veterans and high-level Chinese government officials are preparing for talks again, as business leaders work outside of the Biden administration for greater access to the world’s most populous country.

An influential group conceived during escalating strains between the U.S. and China in 2018 is arranging a new round of meetings before the end of the year, according to a person with knowledge of the matter. The talks, featuring emissaries from U.S. finance as well as senior Chinese regulatory officials, had taken a back seat amid the raging pandemic.

The U.S. and China are grappling with protracted standoffs on issues such as market access, data security and international stock listings. China’s most recent crackdown on a number of its own companies burned international investors, further puzzling the U.S. business community, which is seeking more clarity on the recent moves from Beijing.

John Thornton, the chairman of Barrick Gold Corp. and a Goldman Sachs Group Inc. veteran, is one of the chairs of the group dubbed the China-U.S. Financial Roundtable. It had been put together with the support of senior Chinese officials and co-chaired by former central bank governor Zhou Xiaochuan.

Thornton is in Beijing meeting with Chinese authorities including Vice Premier Liu He and the China Securities Regulatory Commission Vice Chairman Fang Xinghai, two people said, asking not to be identified because they aren’t authorized to discuss the matter. The CSRC didn’t respond to a request for comment, while the Foreign Ministry deferred questions to other relevant departments.

Wall Street is in a race to tap one of the biggest opportunities in finance as China opens up the industry there. The country scrapped foreign ownership limits in April last year, allowing companies to run their own money-management units and investment-banking operations.

At stake is a piece of China’s $54 trillion financial-services market and as much as $30 trillion in overall fund assets to be managed within three years. For its part, China is trying to introduce fresh blood into its finance industry as it reforms its pension system and tries to drive household wealth into long-term investments beyond stocks and property. Foreign companies could play a key role in helping the country build a more mature market.

‘Get Out’

Past meetings have drawn representatives with ties to heavyweights of U.S. finance, including Blackstone Inc., Goldman Sachs, JPMorgan Chase & Co. and Morgan Stanley. The delegation last met in October. At the time they had resolved to try and mitigate political risk that threatened their access to the world’s largest market outside the U.S.

When initially conceived in 2018, the talks drew a strong rebuke from the then White House top trade adviser, Peter Navarro, who told Wall Street to “get out of the negotiations,” accusing them of pressuring President Donald Trump to end his trade war with China. While the pandemic prevented face-to-face engagement, the roundtable met virtually in October and is expected to resume in a similar format this year.

Tensions with the U.S. remain high. Securities and Exchange Commission Chair Gary Gensler on Tuesday warned hundreds of Chinese companies that have raised money in U.S. markets that they risk having their shares delisted if they don’t submit to increased scrutiny. Gensler pledged to strictly enforce a three-year deadline that requires the firms to permit inspections of their financial audits, implementing a mandate from Congress.

Despite this, China has been opening its financial markets more fully to Wall Street giants such as Goldman Sachs and BlackRock Inc., counting on them to provide fresh investments and foster a more competitive local investment-banking and mutual fund industry.

China this week also sent its strongest signal yet that it’s serious about resolving an impasse with the U.S. over access to its companies’ books.

The State Council, China’s top government body, on Monday issued guidelines saying it would boost cross-border accounting cooperation, while also safeguarding its information security. That came on the heels of a statement from the nation’s securities regulator, which said it would work on enhancing conditions for cooperation with the U.S. on company audits during the second half of the year.

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