March 16, 2023
China Watches U.S. Banking Crisis
Journalist John Feng
"A lot of people on both the U.S. and the Chinese side are pontificating about global financial contagion, or that Chinese startups are going to suffer and won't be able to get dollar funding. I think it's too early to say," Emily Jin, a research assistant at the Center for a New American Security, told Newsweek.
"But would the event be an impetus for more entrepreneurial banks driven by market considerations to spring up inside of China? I would say no, mostly because the Chinese financial sector machinery is for state-owned enterprises and not necessarily built for purpose for these private actors. That's probably among the reasons why certain Chinese startups went to SVB," she said.
Chinese state media's eagerness to tamp down risks associated with SVB may be an attempt to pacify the market, said Jin of CNAS.
"Whether Chinese officials make a public statement, they likely intend to milk this situation," she said. "The CCP would likely use this as an opportunity to further centralize its financial regulatory authority. Whether centralizing its authority actually leads to prudent financial regulation and meaningful reform is a question."
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