Trump’s victory raises concerns for Wall Street’s China plans

More US financial firms may scale back operations in China, separate local units to reduce risks, or delay expansion due to concerns about geopolitical tensions under a Donald Trump presidency.

Mainland China was a profitable market for Wall Street firms and major US asset managers before the pandemic, with double-digit economic growth.

Firms with Chinese units are facing increased risks due to potential trade tensions between Beijing and Washington under the new US administration. The Chinese units are already struggling with economic challenges and regulatory changes impacting revenues.

President Trump has proposed high tariffs on Chinese imports and changes to trading status. There are concerns about potential restrictions on US capital inflows into China and financial firms working with Chinese companies.

Analysts predict a tougher stance on China from the new administration, leading to higher regulatory risks for US financial firms in the region.

New tariffs and capital restrictions may deter Wall Street firms from expanding in China due to increased scrutiny and compliance concerns.

The analysts  suggested that American firms may rethink their China strategies to manage risks, potentially resulting in reduced or postponed investments.

A senior executive at a China-licensed branch of a major US financial company revealed to Reuters that the firm had conducted several “risk management meetings” at its headquarters in the months before the election.

Following Trump’s re-election, the firm is now prioritising the development of its China business as a self-sustaining independent unit. The executive, who preferred to remain anonymous, cited the sensitivity of the situation.