Now that the growing geopolitical tensions between China and the United States have had a major casualty, the U.S. banking and finance joint’s ambitions of capturing the 60 trillion dollar China market are in tatters.
Two of the biggest U.S. financial institutions, Goldman Sachs and Morgan Stanley, have decided to scale back their mega ambitions for the world’s second-largest economy. Goldman Sachs has decided to revise its five-year projections, while Morgan Stanley has halted its plan to start an onshore brokerage in China.
Not just that several U.S. firms are in the process of reducing their China workforce as well, but just about 18 months ago things were bright.
U.S. banks were keen on beating their Chinese counterparts on their home turf, but then three things derailed this plan: COVID-19, the resulting slowdown in geopolitical tensions between the two countries, and President Xi Jinping’s increasing all-out solitarianism.
J.P. Morgan City, Bank of America, and Morgan Stanley had combined China exposure of 48 billion dollars in 2022; now that’s down 16 from 2021.
But the exposure is still very high given the uncertain economic situation in China and the geopolitical tensions, so it won’t come as a surprise if these bands start looking at other markets as well. Beyond is now available in your country.
