Skip to content
The Editors

The U.S. and China Don’t Need a Cold War Over Capital

Restricting U.S. investment in Chinese companies, as some in Congress have proposed, would almost certainly backfire. Here’s what could work instead.

Seller beware.

Seller beware.

Photographer: Liesa Johannssen-Koppitz/Bloomberg

After trade and technology, financial markets are shaping up to be the next front in the cold war between the U.S. and China. Policy makers shouldn’t plunge into this battle too eagerly.

On Monday, Chinese regulators imposed new curbs on companies seeking to list overseas, potentially closing a loophole that technology firms have used to raise capital in the U.S. Broader restrictions could be coming. Meanwhile, U.S. regulators have taken aim at the more than 200 Chinese companies already on U.S. exchanges, mandating that they open their books or face expulsion themselves. Within a few years, whether because of actions by Beijing or Washington, Chinese companies might well be barred from going public in the U.S.