US President Donald Trump’s push to set up a sovereign wealth fund may create a strong competitor for China’s own state investment vehicle – and analysts said the overseas assets of Chinese companies may also be in the crosshairs, urging all parties to be prepared.
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Trump signed an executive order on Monday authorising the creation of a sovereign fund within the year, and suggested the fund could eventually purchase TikTok, the ubiquitous short video app owned by Chinese tech company ByteDance.
Xin Qiang, a professor with the Centre for American Studies at Fudan University in Shanghai, said if the proposed fund does take shape it may make China’s sovereign investment platform a target.
“The US fund may compete against the Chinese one, and if bilateral ties are frayed, it could be used to wage a financial war, like shorting stocks the Chinese fund holds,” Xin said. “It may also race against China to invest in frontier tech or bid for the same assets.”
The academic added the proposed fund is part of a broader undertaking under Trump to implement his election campaign pledges, many of which were related to China.
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“Beijing needs to prepare countermeasures and carefully monitor and analyse the fund’s size, funding structure, operations, intended targets as well as who will be running it.”