Wall Street Giants Reduce Investment and Carry Out Layoffs in China Amid Political and Economic Uncertainty

After enjoying the benefits of the opening up of the Chinese market, Wall Street financial companies have recently considered that the drastic changes in the political and economic environment will affect their profit targets. They have not only reduced investment, but also carried out a large number of layoffs.

“Bloomberg” May 17reportafter more than three years of opening up of China’s financial market, Wall Street financial giants Goldman Sachs and Morgan Stanley finally realized that they should continue to make a fortune in China’s $60 trillion market The chances are extremely slim.

“Bloomberg” pointed out that the Chinese authorities recently searched well-known due diligence consulting companies on the grounds of fear of sensitive data and information leakage, and urged state-owned enterprises to cut off ties with the world’s four major accounting firms. Financial data companies have also been forced to stop providing detailed information about Chinese companies to overseas customers as in the past, and foreign businessmen in China are facing rapid and severe scrutiny by the authorities, which inevitably makes investors anxious and panic.

“Bloomberg” reported that Goldman Sachs has revised its five-year plan for China, Morgan Stanley has also decided not to set up a brokerage in China temporarily, cut investment in derivative financial products and futures business, and laid off employees, while JPMorgan Chase (JPMorgan Chase) As early as the beginning of this year, it has begun to lay off Chinese employees. Bloomberg described that these Wall Street giants were generally optimistic about the prospects of the Chinese market 18 months ago and thought they could compete with large Chinese banks. Now they are suddenly going in the opposite direction, which is like performing a “hairpin turn”. Although many banks have laid off employees around the world, but The scale of layoffs in China is unprecedented and the force is the strongest.

Wall Street giants lay off workers on an unprecedented scale in China

In addition, while the industry generally believes that China’s economy is in a sharp decline, former senior U.S. economic and trade officials once again reminded that the hostility and actions of the CCP to launch an economic war have a long history, and the U.S. government and industry should be particularly vigilant at this time.

“Voice of America”reportOn May 17, Robert Lighthizer, the head of the Trump administration’s trade agreement with China and former U.S. White House trade representative, called at the hearing of the U.S.-China Strategic Competition Select Committee of the U.S. House of Representatives. In fact, the CCP’s economic war against the U.S. has already For decades, the U.S. should stop being naive about the CCP, and the U.S. government should strategically decouple from China economically.

When Lighthizer was invited to testify before Congress, he warned that China is the most dangerous threat to the United States, and even the most dangerous opponent in the history of the United States, emphasizing that “their (China) behavior is becoming more and more aggressive, tending to militarism, totalitarianism, and targeting We (the United States), China believes that it is destined to become the only superpower in the world, and we are the obstacle.”

Lighthizer reminded that the United States must look at China’s economic activities from a different angle, “Don’t forget that they are open adversaries”, “It is no exaggeration, China has been waging economic war against the United States for decades, using typicalMercantilismAll the tools of , and more. “They force our companies to hand over technology, and if they don’t, they steal it. China is the world’s largest source of industrial espionage.”

Echoing Lighthizer’s testimony, the chairman of the U.S. House of Representatives Select Committee on Strategic Competition with China, Mike Gallagher, said that for the past 25 years, both Republicans and Democrats have made naive bets on China, thinking that strong economic exchanges will lead the CCP to politics Liberalization, while Beijing sees typical American optimism as an opportunity, while refusing to abide by contracts and international commitments.

Wall Street’s optimism about China’s economy is a hoax

Former Morgan Stanley executive who is now chairman of Rockefeller InternationalSharma(Ruchir Sharma), on May 21 in the Financial Times (Financial Times)publish an articlepointed outdata show that Wall Street’s optimistic expectations for the Chinese economy are a hoax and “seriously out of touch with reality.” The Chinese economy is corrupt, but don’t expect Wall Street analysts to tell the truth.

Sharma is a fund manager, the British “Financial Times”, the US “Newsweek” (Newsweek) columnist, and has been a long-term contributor to the US “Wall Street Journal” and India’s major financial dailyThe Economic Timesand other famous financial publications.Author“The Next Economic Wave”.

Sharma criticized that Wall Street analysts’ forecasts for China’s economy are actually more optimistic than Beijing’s “unattainable economic growth target”. The premise of driving economic growth is that a large number of consumers will spend wildly, but there is no sign of this in the financial report. If the Chinese economy grows optimistically at 5% of GDP (Shamma bluntly said that its potential has been halved), the growth of corporate income should exceed 8%. %, yet corporate revenue grew only 1.5% in the first quarter of this year. However, some Wall Street experts insist on predicting that China’s GDP growth will be much higher than 5%, which is even more optimistic than the Chinese government, but it does not match the reality of Chinese companies’ poor management.

Sharma pointed out that the MSCI China stock index did not show the upsurge of market reopening, but it fell 15% from its peak in January, consumer discretionary stocks fell 25%, and China’s credit growth slowed. Monthly growth was half what was expected, and youth unemployment soared as high as 20 percent in urban areas, leading to weak spending among young people.

No matter how Wall Street analysts whitewash the Chinese market, there are real signs that Wall Street bosses have already planned to reduce the scale of investment in the Chinese market.At the end of last year, Bloomberg had alreadyreport, Goldman Sachs Group and UBS Group (UBS) have eliminated employees who specialize in the Chinese market. Some multinational banks are expected to cut spending in China in 2023, and a wave of layoffs and resignations will follow. Now that the middle of 2023 has passed, the Wall Street financial industry is indeed downsizing and layoffs in China, and all these actions to leave the Chinese market may have just begun.