US Decoupling From China Would Slow Innovation, Citadel Founder Says

(Yicai Global) March 25 — If the United States were to decouple from China, it would slow innovation, Ken Griffin, founder and chief executive of US financial firm Citadel LLC, said in a recent interview with Yicai Global.

Citadel’ hedge funds have been among the world’s most profitable in the past 30 years and the firm’s market maker business has a one quarter share of the US market, while also operating in more than 35 countries and regions.

Part of the interview is below.

Yicai Global: To some extent, the US has been decoupling its economy from China’s. For example, restricting China’s access to some US high-tech products like semiconductors. You have said before that this is a big mistake. Why?

Griffin: Overall, the economic integration over the last several decades has been an incredibly powerful force for increasing the welfare of both our nations. One of the areas we have worked in together over the decades is the area of technology.

The collaboration between our two countries in developing software, solutions and consumer products has been amazing. It created an incredible amount of value for consumers in both of our nations.

I’m worried the decoupling of our software and hardware will mean less opportunities for consumers to have advanced solutions and will slow the rate of innovation.

YG: What do you think of the steps China has taken to open up its financial market in recent years?

Griffin: Chinese regulators have been incredibly thoughtful about encouraging foreign participation in the Chinese financial market over the last 15 years.

We believe that foreign capital coming in will improve the competitiveness of the capital allocation process in the Chinese market. Western money is often supported by very strong research. This will help all market participants to do a better job in the allocation of their capital.

So we are really excited about the impact in China of the opening up of its financial market to foreign firms. We think it will help create an incredible amount of value for Chinese corporates and citizens in years to come.

YG: Citadel Securities is a leading market maker. China now is also getting into the market-making business. Could you tell us a little bit about what role market makers play in the US?

Griffin: Market makers play a really important role in giving people peace of mind. As China looks to launch a variety of new financial instruments, the role of market makers will become obvious.

In the equity market here in the West, market makers play a very important role in maximizing liquidity, driving down bid-ask spread, and increasing market resiliency. These are the attributes that China will look to embrace in the years to come.

Editor: Tom Litting

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