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“The Unknown Unknowns Have Increased”: Wall Street Ponders the China Conundrum

Joe Biden and Xi Jinping
Photo by Chip Somodevilla/Getty Images
William D. Cohan
October 6, 2021

In a September research report, the mighty Goldman Sachs asked the important question: “Is China Investable?” By this, Goldman wasn’t necessarily thinking about retail investors. Instead, the firm was hypothesizing about the risk tolerance for the companies that it specializes in advising, and raising capital for, around the globe. Should they still feel comfortable doing business in the country?

It’s a question that many on Wall Street are pondering these days. “The known unknowns and the unknown unknowns have increased,” explained one very senior Wall Street executive, echoing the late Donald Rumsfeld’s famous expression. We were speaking soon after the United States, Britain, and Australia agreed to a nuclear submarine deal designed to countermand China’s increasing military presence in the South China Sea (and one that also pissed off France). “That’s sort of a direct acknowledgement that  portions of the Western world [believe], ‘You know what, we have to begin to counteract China’s intrusion into Southeast Asia, the Middle East and Africa, put aside Taiwan,’” he continued. (We spoke just before China buzzed Taiwan with some 56 fighter jets during a fraught couple days.)