Third index provider removes Chinese firms, won't hurt nation's economy
Third index provider removes Chinese firms
Published: Dec 13, 2020 08:33 PM

Pedestrians walk past the New York Stock Exchange (NYSE) in New York, the United States, Sept. 3, 2020. (Xinhua/Wang Ying)

Removing Chinese firms from global indices due to the Trump administration's blacklisting may lead to a short-term trend of anti-Chinese company moves in the financial sector, but China's economy, military and technology development will not be impeded by Trump's executive order at all, a Chinese expert said.

The comment came after NASDAQ announced plans to remove shares of four Chinese companies from indices it maintains, the third index provider taking such a move this month in response to the order.

NASDAQ on Friday announced that the securities of four Chinese companies, which are not traded on the exchange, will be removed from the indices on December 21. They are China Communications Construction Co, China Railway Construction Corp, CRRC Corp and Semiconductor Manufacturing International Corp (SMIC), which are categorized by the Trump administration as being tied to the Chinese military. 

The four Chinese companies are the only ones among those on the White House list that appear in the NASDAQ indices, Reuters reported, cited a spokeswoman. 

Earlier this month, London-based index provider FTSE Russell decided to axe eight Chinese companies from its indices on December 21 in response to an executive order that was signed by US President Donald Trump in mid-November to prohibit transactions in certain Chinese securities allegedly linked to the Chinese military. The order will take effect on January 11. 

Following FTSE Russell, S&P Dow Jones Indices said on Thursday that the securities of 10 Chinese companies will be removed from S&P DJI equity indices, effective on December 21. 

Such moves will be a short-term trend, which will restrict the listings of top Chinese technology companies on the US stock market, Dong Shaopeng, a senior research fellow at the Chongyang Institute for Financial Studies of Renmin University of China, told the Global Times on Sunday. 

"Chinese companies with advanced scientific and technological assets will lose their ability to get listed in the US," Dong acknowledged, "but the harm will be limited. China's economy and military development will not be affected by the US sanctions or its misbehavior."

Showing confidence in China's huge market and its scope to take steps on supply-side structural reform, Dong said China will focus on its own development, particularly in intellectual property, and independent scientific and technological breakthroughs. 

In a statement issued on December 4, SMIC said that being listed by the US as a military company did not have a significant impact on the company. It strongly opposed the decision and said it shows the US' fundamental misunderstanding of SMIC's international business and the end-uses of its technologies. 

SMIC had not responded to a Global Times inquiry as of press time. 

As US President-elect Joe Biden is sworn in on January 20 next year, expectations that he will overturn Trump's decisions have arisen. 

"However, we are not pinning our hopes on Biden. It is unlikely for him to negate Trump's China policies completely within one to three months after he takes office, because US domestic political conflicts remain extreme, leaving Biden to try to play it safe," Dong noted.