Financial Cold War

A groundbreaking exploration of US-China relations as seen through the lens of international finance

Rising tensions between China and the United States have kept the financial markets on edge as a showdown between the world's two largest economies seems inevitable. But what most people fail to recognise is the major impact that the financial markets themselves have had on the creation and acceleration of the conflict.

In Financial Cold War: A View of Sino-US Relations from the Financial Markets, market structure and geopolitical finance expert James Fok explores the nuances of China-US relations from the perspective of the financial markets. The book helps readers understand how imbalances in the structure of global financial markets have singularly contributed to frictions between the two countries.

In this book, readers will find:

• A comprehensive examination of the development of financial markets in both China and the US, as well as the current US dollar-based global financial system

• Insightful observations of the roles of technology, innovation, regulation, taxation, and politics in the markets, and on their resulting effect on US-Sino relations

• Thorough explorations of the role of Hong Kong as an intermediary for capital flows between China and the rest of the world

• Suggestions for how, balancing the many varying interests, policymakers might be able to devise effective strategies for de-escalating current Sino-US tensions

Financial Cold War is a can't-miss resource for anyone personally or professionally interested in the intersection of economics and international relations, financial markets, and the infrastructure underlying the international financial system.

Auteur

James A. Fok is a veteran financial and strategic advisor to corporations and governments. He served as a senior executive at Hong Kong Exchanges and Clearing (HKEX) during a decade of rapid internationalisation in China's capital markets. Prior to that, he worked as an investment banker specialising in the financial services sector.

Contenu

Preface xi

Acknowledgements xix

Abbreviations xxiii

Chapter 1 Introduction 1

Legacy of the GFC 5

Modern History of Sino-US

Relations 6

The Financial Roots of Sino-US

Conflict 11

The Financial Path Out of Conflict 15

PART ONE THE COLOUR OF MONEY TURNS GREEN 17

Chapter 2 How the US Dollar Took Over the World 19

An Ad Hoc Position 21

The Barbarous Relic 24

Two Competing Plans 30

A British Innovation 34

The Coupon Express 36

Plumbing the World's Financial Markets 42

Niksonu Shokku 47

Volatility 51

'Risk Free' Assets 57

Boom and Bust 62

Chapter 3 Whose Problem? 65

The Unipolar Moment 69

The Almighty Mr. Market 74

Emerging Markets Crises 84

The Weakest Link 98

The Music Stops 102

Anyone for Tea? 108

A Tipping Point? 113

PART TWO CAPITALISM WITH CHINESE CHARACTERISTICS 123

Chapter 4 From First World to Third and Back Again 125

Maritime Power 131

The Milk of Paradise 135

Wars and Revolutions 147

A Leap into the Abyss 156

Herding Cats 161

Crackdown 172

Journeys to the South 177

A New Path 181

The Bird's Nest 187

Chapter 5 Two Steps Forward, One Step Back 192

Going Public 197

The Protection Racket 206

The Price of Money 212

Still Building, But Will They Come? 221

Alien Attack 228

Who Will Look After Grandma? 237

Connecting China and the World 242

Can't Buy Me Love 262

PART THREE THE FINANCIAL COLD WAR 271

Chapter 6 A New Cold War? 273

A Close Call 277

Fly Me to the Moon 279

Tax Me If You Can 284

A War of Words? 291

Geo-economic Warfare 294

Chapter 7 The Role of Markets in the 21st Century 307

Selective Efficiency 310

What Happens When Competition Dies 313

Wrong Incentives 318

Bubbles and Cycles 321

Funny Money 328

We're All in the Same Boat 342

Chapter 8 Avoiding the Thucydides Trap 343

Admitting the Problems 345

A New Bretton Woods? 350

MAD for Markets 362

It All Starts with Leadership 365

Afterword 369

Cast of Characters 379

Bibliography 397

Notes 419

Index 449