Tag: Delist

The New York Stock Exchange announced that it would delist the three major state-owned telecommunications companies in China by order of the Trump administration in order to symbolically end the longstanding relationship between the Chinese business community and Wall Street.

The exchange said in a statement late Thursday that it would cease trading shares in China Mobile, China Unicom and China Telecom until Jan. 11. She cited an executive order issued in November by the Trump administration that prevented Americans from investing in companies with ties to the Chinese military.

The U.S. Department of Defense had previously listed the three companies as having significant ties to Chinese military and security forces.

The company’s Hong Kong offices did not immediately respond to requests for comment on Friday, New Year’s Day.

The delistings were generally expected after the executive order was issued in November. The order was part of a broader effort by American officials to weaken the broad economic ties between the United States and China, including Chinese access to money on Wall Street.

The move is likely to have little impact on China’s military or security ambitions, which are generously funded by Beijing, or on the companies themselves, which can raise money from international investors by selling shares in Hong Kong.

The delisting of the three telecommunications giants, however, reflects China’s rise in power and prosperity, as well as growing alienation between the world’s two largest economies. It also underscores the hesitation in long-standing business ties between the United States and China, built over decades as China attempted to internationalize and reform its state corporate sizes.

All three companies are under the firm control of Beijing. They are ultimately owned by a government agency, the State Assets Monitoring and Management Commission, and are often directed to pursue Beijing’s goals. China’s ruling Communist Party sometimes mixes executives between the three companies.

They are the only three companies in China allowed to provide broad telecommunications network services, which Beijing regards as a strategic industry that must remain under state control.

Such large, state-controlled corporations have long been viewed by economists and even some Chinese officials as a drag on the country’s growth.

China Mobile, the largest of the three companies, first listed its shares in New York in 1997, at a crucial time for the Chinese economy. Reform-minded officials in Beijing sought to restart economic growth after China’s crackdown on the Tiananmen Square protests in 1989 deterred foreign investors and delayed overhauls officials deemed necessary.

One such overhaul had to do with bloated state-owned companies. China’s leaders forced them to lay off workers and focus on profit and productivity. Listing stocks in the United States, it was said, would make them more responsive to investors and more focused on the bottom line.

China Mobile was one of the first large Chinese state-owned companies to sell shares in New York. The other telecommunications companies followed, as did state banks, oil companies and airlines. Large private Chinese companies have also sold stocks there, including Alibaba, the online shopping giant that held the world’s largest IPO in New York in 2014.

Today, China’s need for money and expertise has diminished from Wall Street. The stock exchanges in Shanghai and Hong Kong are among the largest in the world. Alibaba underscored the shift, last year listing shares in Hong Kong, a semi-autonomous Chinese city where investors, unlike the mainland, can move money freely across its borders.

The Chinese leaders’ view of state-owned companies has also changed. Xi Jinping, China’s leading politician, spoke about making state-owned companies bigger and stronger than leaner. This has raised concerns among some economists and entrepreneurs that the Chinese government is playing a bigger role in private companies.