Investment banker Howard Lutnick's ties to China came under intense scrutiny on Wednesday, following his appointment by Republican President-elect Donald Trump to lead the agencies at the forefront of the US-China trade war. Lutnick's financial services firms, including BGC Group and Cantor Fitzgerald, have benefited from their connections to China. BGC Group has a joint venture in Beijing with China Credit Trust, a state-owned enterprise, while Cantor Fitzgerald has assisted Chinese firms in going public in the United States.
These financial ties have sparked concerns among lawmakers and ethics experts about whether Lutnick could be influenced by Beijing when making decisions on imposing tariffs and export restrictions as United States Trade Representative and Commerce Secretary. Democratic Senator Ron Wyden, chair of the Senate finance committee, questioned how the American public could trust someone with financial ties to the Chinese government to advocate for American workers. A spokesperson for Lutnick could not be immediately reached for comment, nor could Cantor Fitzgerald, BGC Group, or the Trump campaign.
Democratic Senator Tim Kaine, a member of the foreign relations and armed services committees, emphasized the importance of Lutnick prioritizing the American people over personal business interests. BGC Group holds a 33% stake, valued at nearly $28 million, in a joint venture with China Credit Trust, whose largest shareholder is state-owned China People's Insurance Company (PICC Group). PICC Group has ties to Huawei, the Chinese telecom giant sanctioned by Washington over espionage fears.
The joint venture, China Credit BGC Money Broking Company Limited, was the first currency brokerage company licensed to operate in Beijing in 2010. It provides brokerage and data services for various markets. Kathleen Clark, a professor of government ethics at Washington University in St. Louis, highlighted the potential for the Chinese government to exert influence over the commerce secretary through such business partnerships.
US law prohibits executive branch officials from participating in matters that would affect their financial interests. However, Clark noted that Lutnick might not violate this law as any trade policy changes could have indirect financial impacts. The emoluments clause of the constitution aims to prevent foreign governments from influencing US policy through financial benefits to US officials.
Cantor Fitzgerald has also facilitated Chinese companies' access to US investors, including underwriting the NASDAQ IPO of Chinese biotech firm Adlai Nortye. The firm also led deals for Chinese companies GD Culture Group and Aesthetic Medical International to trade on US exchanges. BGC's September financial filing underscores the challenges Lutnick faces in balancing his business and policy roles, noting that US-China trade relations could impact company results.
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