The US-China face-off over Covid-19 is escalating. While Washington is right to take Beijing to task it must study its actions and not leave any loose ends to discipline China.
The US Senate has unanimously passed a Bill to delist Chinese companies from US exchanges. About 800 Chinese companies with a combined market capitalisation of $1 trillion, or 5 per cent of the total value of all stocks traded in the US, could be impacted.
This does not immediately threaten investors in these companies. The US House of Representatives has to pass a similar law, which requires companies to certify that they are not under the control of the Chinese government.
The Covid-19 pandemic has turned the US-China already sour relationship bitter and significant sections of the American public and their representatives on Capitol Hill are baying for China's blood and rightfully so.
This raises the scary prospect that the brewing crisis could rapidly escalate out of control to the point where each country freezes the other's assets. Some analysts are even speculating that mercurial US President Donald Trump could renege on servicing the $1.2-trillion US Treasuries held by China. This will throw the global financial world into chaos as US T-bills are considered the safe haven security in an uncertain world. A default - that's what a politically motivated decision not to service the bills will amount to - would cause unprecedented economic panic and make the 2008 global financial crisis and the current coronavirus-induced global recession seem like walks in the park in comparison.
This will throw the global financial world into chaos as US T-bills are considered the safe haven security in an uncertain world.
This doomsday scenarios need not come to pass. It's quite possible that the US is playing a high stakes game of diplomatic and strategic poker and will desist from pulling the trigger if it can extract some meaningful concessions from China.
The possibilities are tantalising.