Decoupling the US from China would slow innovation, says Citadel founder

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

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

Part of the interview is below.

Global Yicai: To some extent, the United States has decoupled its economy from that of China. For example, restricting China’s access to certain US high-tech products like semiconductors. You already said that was a big mistake. Why?

Griffin: Overall, economic integration over the past few decades has been an incredibly powerful force in increasing the well-being of our two nations. One of the areas in which we have worked together over the decades is in the field of technology.

The collaboration between our two countries in the development of software, solutions and consumer products has been incredible. This has created incredible value for consumers in both our countries.

I worry that decoupling our software and hardware will mean fewer opportunities for consumers to have advanced solutions and will slow the pace of innovation.

GG: What do you think of the measures taken by China to open up its financial market in recent years?

Griffin: Chinese regulators have been incredibly careful to encourage foreign participation in the Chinese financial market over the past 15 years.

We believe that the influx of foreign capital will improve the competitiveness of the capital allocation process in the Chinese market. Western money is often backed by very solid research. This will help all market players to better allocate their capital.

So we’re really excited about the impact in China of opening up its financial market to foreign companies. We believe this will help create an incredible amount of value for Chinese businesses and citizens in the years to come.

GG: Citadel Securities is one of the leading market makers. China is also getting into the market-making business. Could you tell us a bit more about the role market makers play in the United States?

Griffin: Market makers play a very 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 apparent.

In the equity market here in the West, market makers play a very important role in maximizing liquidity, narrowing the bid-ask spread, and increasing market resilience. These are the attributes that China will seek to adopt in the years to come.

Publisher: Tom Litting

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