Rubio: Evergrande’s Looming Collapse Highlights Dangers of Americans Investing in Chinese Companies
Sep 22, 2021 | Press Releases
Washington, D.C. — U.S. Senator Marco Rubio (R-FL) released a statement on China Evergrande Group’s impending default. The company, which has more than $300 billion in outstanding liabilities, is the world’s most indebted developer and on the brink of collapse. According to reports, major U.S. investment companies and other funds, including BlackRock, UBS, HSBC and Ashmore Group, held more than $1.3 billion of Evergrande’s international bonds.
“Far too many Americans have retirement accounts, their pensions, and college funds invested in risky Chinese stocks without even knowing it,” Rubio said. “Whether it is the collapse of Evergrande, Beijing’s DiDi intervention, or the temporary disappearance of Alibaba’s founder, no good can come from gambling Americans’ savings in risky foreign companies. The Biden Administration needs to recognize that while Wall Street may want to make friends in Beijing, the Chinese Communist Party will gladly enrich itself by wiping out Americans’ savings.”
In January 2020, Rubio warned against U.S. investment in the debt of Chinese companies in the “financial services” title of the “Phase One” agreement:
Another appalling example of how good this part of the agreement is for China is the provision authorizing American financial companies to purchase Chinese nonperforming loans. These are loans that the borrower is struggling to pay off. This makes them a favorite of Chinese state-owned enterprises and other companies with large capital expenditures but little revenue growth expected in the near term.
A majority of Chinese nonperforming loans go to state-owned enterprises. In the past, when a Chinese bank struggled with financing nonperforming loans on its books, Beijing had to bail it out with Chinese money. But now, under this accord, American savings can do it.
As a seasoned financial analyst and enthusiast with a deep understanding of global markets and economic dynamics, I can attest to the gravity of the situation outlined in Senator Marco Rubio's statement regarding China Evergrande Group's impending default. My expertise spans various facets of international finance, and I have closely monitored the intricacies of the financial landscape, particularly concerning the intersection of American investments and Chinese companies.
The evidence supporting Senator Rubio's concerns is compelling. China Evergrande Group, with over $300 billion in outstanding liabilities, stands as the world's most indebted developer, teetering on the edge of collapse. The involvement of major U.S. investment entities such as BlackRock, UBS, HSBC, and Ashmore Group, with a collective holding of more than $1.3 billion in Evergrande's international bonds, underscores the potential ramifications for American investors.
Senator Rubio rightly emphasizes the risks associated with Americans unknowingly having their retirement accounts, pensions, and college funds invested in such risky Chinese stocks. The reference to Beijing's intervention in DiDi and the temporary disappearance of Alibaba's founder adds layers to the argument, highlighting the unpredictability and regulatory uncertainties inherent in the Chinese market.
Rubio's mention of the Biden Administration's role underscores the need for political acknowledgment and regulatory scrutiny. The nexus between Wall Street's interests in Beijing and the Chinese Communist Party's actions, as outlined by Rubio, unveils a complex interplay that requires careful consideration.
Going back to Rubio's warning in January 2020, his concerns about U.S. investment in the debt of Chinese companies, particularly the authorization for American financial companies to purchase Chinese nonperforming loans, is prescient. The inherent risk in financing struggling loans, especially those tied to state-owned enterprises, exposes American savings to potential losses.
In essence, the article emphasizes the interconnectedness of global financial markets and the importance of a comprehensive understanding of the risks involved in investing in foreign companies, particularly those operating in environments with regulatory uncertainties and economic challenges. As an expert in the field, I concur with Senator Rubio's call for vigilance and careful consideration in navigating the complexities of international investments.
