The hearing will come to order.
Last week, Jiang Zemin rang the opening bell at the New York Stock Exchange. Well today, I am sounding the alarm on China's activities in the U.S. financial markets.
Over the last several years, China, and companies connected to the government have been quietly gaining a greater presence in our markets.
Our witnesses today will tell us that China and related companies have issued nearly $7 billion in bonds in the U.S. in the past decade. In addition, there are currently 17 Chinese companies listed on the New York Stock Exchange. I am also told that as China begins so called 6 4privatization" -- as many as 350 companies a year may seek financing in our securities markets during the coming decade.
All of this concerns me for two reasons.
First, some of these companies, like the Chinese International Trust and Investment Corporation have close connections to the Chinese Army. They have issued $800 million in dollar denominated bonds over the past few years. Their bonds have been underwritten by major U.S. firms, like Goldman, Sachs.
My chief concern is that U.S. investors could unknowingly be financing the Chinese Army. I have to ask do we really want our mutual funds and pension funds investing in building the military capability of the Chinese Army?
Further, what other Chinese companies are connected to the government -- and what is the true nature of their business. This is something that American investors must know.
My second concern is the great potential for fraud in many of these securities activities. Our witnesses today will discuss the artificial markets that are being made for these securities -- that are then passed on to U.S. fund managers at prices that don't reflect reality. Again, unknowingly, small investors and retirees could find themselves at the losing end of the so called Asian boom market.
One answer to these problems is greater disclosure to the American public about what is really happening. For this reason, I introduced S. 1315, a bill to create an Office of National Security at the SEC to report to Congress on activities involving foreign governments and related companies in our securities markets.
All of this is what we intend to explore at today's hearing.
I want to thank our witnesses for being here today. I especially want to thank
Congressman Solomon for joining us.
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