Financial Cold War: A View of Sino-US Relations from the Financial Markets

by James A. Fok

A groundbreaking exploration of US-China relations as seen through the lens of international finance Rising tensions between China and the United States have kept the financial markets on edge as a showdown between the world’s two largest economies seems inevitable. But what most people fail to recognise is the major impact that the financial markets themselves have had on the creation and acceleration of the conflict. In Financial Cold A View of Sino-US Relations from the Financial Markets , market structure and geopolitical finance expert James Fok explores the nuances of China-US relations from the perspective of the financial markets. The book helps readers understand how imbalances in the structure of global financial markets have singularly contributed to frictions between the two countries. In this book, readers will Financial Cold War is a can’t-miss resource for anyone personally or professionally interested in the intersection of economics and international relations, financial markets, and the infrastructure underlying the international financial system.

Genres: China, Nonfiction, Finance, Economics, History, Politics, Audiobook

512 pages, Hardcover

Published December 20, 2021

About the author

James A. Fok is a veteran financial and strategic advisor to corporations and governments. He served as a senior executive at Hong Kong Exchanges and Clearing (HKEX) during a decade of rapid internationalisation in China's capital markets. Prior to that, he worked as an investment banker specialising in the financial services sector.

Reviews

[Barry Yen · Rating 5 out of 5]

You must read this magnum opus.

The author's impressive understanding of global financial markets shines through the historical review, considered analysis and most importantly his solutions.

The deep research is tightly edited and achieves symphonic flow. The insightful thoughts are interspersed with anecdotes (why would the chair of the federal reserve discuss fly fishing or a supermodel demand euro and not USD) to lighten the serious themes.

Learn as I did about the impromptu Dutch auction in a cigarette carton and how to deal with triangular debt. This is wonderfully accessible to all who have an interest in the impact of fiscal-monetary policies and the tensions between national economies.

Not just for economists and finance professionals, and I doubt any of those have the first-hand knowledge of interplays that Fok has evidently been privy to.

The frank analytical remarks on sensitive and complex issues, and confidence in discussing the countervailing views and interests within countries, and between countries ultimately set this apart.

Rather than the typical moaning prevalent in today's papers and journals Fok's positive approach and hope underly his solutions to halt national decline and debt, USD dominance, and how to reset for "better" socio-economic equilibrium. Of course, having been in the market and understanding human nature his understatement (“political resistance is likely to be considerable”) may elicit a smile but without optimism, we would be entirely lost.

In short: Read this majestic work to enhance your understanding of the global economic milieu. Global leaders would do well to consider the propositions which could favorably impact future generations if they had the courage of the author.

Barry

[Niklas · Rating 5 out of 5]

The freshest breath of air in a long while. Absolutely essential contribution on often overlooked, but crucial details with massive implications. Financial markets are complicated. It is always easier to ignore them and give in to populist and simpler narratives. The author manages to shine light on essential problems underlying the global financial system and its organically developed path dependencies. Never does he allow his own political biases to dictate his analysis, pointing at problems on both sides and mutual (populist) interpretations thereof.
It was a long, dense, and demanding read. Don't expect the author to hold your hand at all times and prepare to look up investopedia every five pages if you are a financial rookie like me.

[Evelyn Ho · Rating 5 out of 5]

A timely comprehensive book analysing multiple factors contributing to existing tensions between US and China in the hope to avoid any catastrophic event in the future through the suggestions by author. A must read in 2022.

[Shane · Rating 5 out of 5]

I started this book hot on the heals of The Bitcoin Standard, so my headspace was already fairly deep in global fiat based volatility, Keynesian based economics principles and the Breton Woods system. This was not pre arranged, but I could not have picked a better book in providing a strong roadmap of Sino - US history. Fok’s succinct deep diving into relevant pockets of history, including the current topical HK (Fok’s residency) gives the reader refreshing accounts of past political and economic events that have helped shaped the region.

The book is broken cleanly in three parts, with both sides histories, their economic development, their fiat dependence ( including extensively on Breton Woods) and then his future assessment based on his wealth of knowledge in both his research and real work experience/exposure.

Fok’s assessment is more positive than other on the new Cold War. I feel he wanted to coin a new term on a couple of occasions along the lines of Mutually Assured Destruction (MAD), but would want the phrase Mutually Assured Success (MAS), refer to Fok’s assessment that both US and China need/want to be co-signers to their success, irrespective of their conflicting political convictions.
If your world involves China and USA economics or politics this is a MUST read, you will not be disappointed.

[Chao · Rating 1 out of 5]

I was really looking forward to this book as this is a pretty important topic in today's world. However, quickly it became clear that the author was not the more neutral POV that I wanted to read. I didn't finish the book, as it became clear that the author's position was more US bashing and China leaning.

I still want to learn more on this topic; I'll look for more impartial POV elsewhere. At the same time, it can be good to read POV that you don't completely agree with, so I leave the door open to coming back to this book. Not sure at this time; I'm still pretty disappointed right now.

Some exerts, with comments:
"I hope this book might help increase mutual understanding and offer some insights to assist some policy makers in both East and West in the extremely difficult task in smoothing the course of China's integration into the international financial system, during a tricky period of geopolitical adjustment."
-> Hmm? China is already well integrated — like the author mentioned, China is the factory of the world. I mean, global supply chain disruptions of 2021-2 anyone? — and anything not integrated is due to the laws set down by (and thus reflects the preferences of) the Chinese government. I really don't see this as a problem. In fact, just the opposite, China is currently strongly campaigning itself as an alternative global financial system based on RMB, with its alternative to the SWIFT system and all. And with Russia's war on Ukraine and its subsequent events, I think there'll be many takers. This is a problem that's not actually a problem.

On the 2008-2010 Great Financial Crisis, "Faith in a social and financial system that has promised stability and prosperity for decades has been shattered, and we've yet to identify an alternative to replace it."
-> I think that so much has happened since that most (American, and most likely Chinese too) people have moved on. Was it a major life events for most (American) people? Hell yeah. Did it affected different generations' perspective on the financial market and personal finance? Totally. But 14 years later, it's already a pretty different world now, and don't forget the market and crypto boom post 2010 (and pre-2022). So continual shattered faith and lack of alternative? I don't think it's so grave. Problem still, yes. OMG THERE'S NO HOPE, not quite.

"Throughout this period, China's record on human rights was an recurring them in the dialogue between the two countries. In part this reflected public opinions in the US and its commitment to liberal democratic values. In part it also serves as a useful pretext when US needed negotiating leverage in other matters. [...] Their (Chinese military leadership) insecurity was further reinforced by Clinton's decision to send tow aircraft carrier to Taiwan during the Taiwan strait crisis."
-> The first part, I felt the author was trying to shift the weight to the pretext alternative and implying something. The second part, why was there no mention of who started this crisis? This was a pretty tricky way of shifting emphasis. This was like saying, Chris was wary of the baseball bat that Sam was carrying -- that Chris's insecurity was reinforced by Sam's decision to carry a baseball bat -- but made no mention of the fact that before this, Chris was waving his baseball bat and closing in on Tom, and that was why Sam decided to go over.

"However given the flaws in the US financial and economic market highlighted by the GFC (Great Financial Crisis), many in the China leadership has become even more skeptical than before of the US free market ideology. To bring about further financial and economic reforms now, the case needs to be stronger than the past. US coercion has had some impact, but is likely to be met with continual resistance. Ultimately it's likely domestic forces will the most effective in pushing Chinese government toward change."
-> Uh, what’s with just slipping in that "US coercion" part, with no explanation or justification for the name calling? Sure I'm sure US coerced many and got coerced back or ignored too, but a good writer doesn’t just throw out a name or phrase but need to back up what you said. And yes, any government is supposed to do what's best for its people, so I sure hope any changes will be for domestic reasons.

"While it is undeniable that there are significant ideological difference between China and the US, far from seeking the overthrow of global capitalism, China has adopted significant aspects of the capitalist model and although it has not embraced American brand of free market ideology, it is today no more socialist than a great many European social democracies. This hardly presents a threat to the American capitalist way of life."
-> Wow. "A great many European social democracies"... which ones? Seriously please enlighten me. I'm quite positive that in the great majority of European social democracies, you won't go to jail for criticizing your government.
Of course, the "jailing for daring to criticize" is also not technically a part of the socialist doctrine, so let's talk about the socialist part. On this, you do know that a prominent social democrat named Bernie Sanders ran for US president in 2016 and 2020 and got tons of support right? So this "China is just like many countries in Europe" implication is a false comparison, and while most in the US doesn’t want by-the-book socialism, this "(China's) socialism is not a threat to (US) capitalism" is another problem that is not actually not the real problem here.
And again, author's implying something here -- that "a threat to the American capitalist way of life" is a motivation factor for the Americans in this -- that's an insinuation and open to debate. Seriously, most Americans are much more focused on their work or school and livelihood and bills than another country's government system. In fact, I'll quote something that the author said earlier that I completely agree with: "It is not unreasonable for Chinese (American) government to pursue policies that improve Chinese (American) people's standards of living (or for their economic benefit, or at least not to their economic disadvantage)."

Early on, the author mentioned how he and his Korean friend got mistaken for Americans and were chased by a mob, and how "populist nationalism is a pretty scary thing". I agree. Later on, the author argued that this is not another Cold war, because back in mid 20th century, the conflict between Russia and US was about ideology, versus now between China and US it's about financial factors. I disagree with that. If you listen to what China is telling its own citizens (not what it's telling the foreign press), and what its most vocal internet netizens are repeating online, China's attitude to US right now is all about ideology. It's about proving to its citizens that the CCP is the far superior choice, its political and its financial system and everything else, than anything the West can ever offer.

[Deirdre E Siegel · Rating 5 out of 5]

An excellent recap of the political history involving East and West.
It is nice, to listen to a citizen voice their opinions towards constructive equality.
A contract of Act Globally Responsible is better than a treaty made of compromises.
Somewhere along the line Government enabled the 1% to enslave 99%.
Maybe the 99% need to remember they are voters enabling the 1%.
Brilliant read / listen thank you James A Fok for the words and Christopher Groves for the eloquence, much appreciated. :-)

[Meg · Rating 5 out of 5]

Well-written and researched thoroughly. This one will not put you to sleep, I promise.

[Benjamin Schuler · Rating 5 out of 5]

Very good book. Gives insight into the underlying conflict between the great powers of our time and how the international financial system is used to their benefit. Moreover the book shows the differences between the wests liberal markets and Chinas rather restrictive and slow opening markets to foreign investments, and also explains the differences through cultural and historical means.

[Dawei Liu · Rating 3 out of 5]

Financial Cold War was not the most exciting read, but it can be read relatively quickly. It’s a book that actually is deceptively not about what the title advertises. James Fok, a former banker and senior exec at HKEX walks through basically a pop history of the US financial system as well as the Chinese financial system. If you like books like Sapiens, by Yuval Harari, you’ll like this book as it uses many of the same tricks to simplify hundreds to thousands (in the case of China) of years of history through anecdotal conclusions. These historical overviews represent the bulk of the book, though I will admit the modern era, particularly as it pertains to China does a very good job covering history that is not taught to most westerners (who are clearly the target readership of the book).

Only the last quarter to third of the book lay out the current trade war/”financial cold war” the US and China are having. There aren’t many answers provided, but I did find this section interesting and worth reading. All in all, I did learn from the book, but probably wouldn’t go out of my way to recommend it to people.

[Evan · Rating 2 out of 5]

This is like a book about penguins which spends 90% of the time on all birds. Some very interesting points, but not what was sold. I understand the need for background, but really, I picked up the book because of the main topic, not the asides.

[xiaobao · Rating 5 out of 5]

Hong Kong was born to be a bridge for not only mechanism but also ideology.

[Vu Phong · Rating 5 out of 5]

5-