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NEW HAVEN — Yale University’s special relationship with China just got a little more special.
The university confirmed Wednesday that it has been authorized to trade China’s domestic stocks and bonds, the first foreign academic institution allowed to do so.
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China has the fastest-growing economy in the world and could supplant the United States as No. 1 within a decade. Allowing Yale’s endowment investors access to China’s stock market is a big plus.
"Whatever you do, if you are first, that is significant," said Jing Huang, a senior fellow in the China Initiative at the Brookings Institution, but he hopes the announcement is more than symbolic.
Jing said the most important sector of the Chinese economy has been pretty much monopolized by the government.
"To let Yale get into that part, which has never been allowed to foreigners is, I think, the beginning of a new policy, which I believe will be helpful in the long term for the currency issue," Jing said.
One of the things President Bush is expected to discuss today with Chinese President Hu Jintao is that country’s undervalued currency.
Hu winds up his first visit to the United States by stopping for a few hours at Yale on Friday, where he will deliver a speech, a testament to the special relationship with the university.
Jing said that if China fully opened up its financial markets, the currency value would flow freely.
"Then there would be no currency issue, because it would be determined by the market, rather than the government," Jing said.
Jing hopes other financial companies can follow Yale into China’s market to really have an impact.
China allows foreign investors to buy a limited array of stocks and bonds, called B shares. Its larger domestic stock exchange, known as A shares, is open to Chinese investors and a small group of foreign institutions.
Yale is second only to Harvard University in the worth of its endowment, which is now more than $15 billion.
Yale’s relationship with China goes back to 1854, when Yung Wing earned a Yale degree, the first Chinese citizen to graduate from an American university.
Yale President Richard C. Levin, who has visited the country six times in his decade-plus tenure as president, has advanced 60 academic collaborations with China.
This fall, the university launched a joint undergraduate program with China’s Peking University, while scores of Yale students are scheduled to spend some part of their academic careers in exchange programs in China.
For two years, Yale also has played host to summer seminars for university leaders in China interested in offering more Western-style education in that country, one that emphasizes academic freedom and an open exchange between students and teachers.
In a previous interview, Levin said the Chinese are following a strategy of developing economically first before opening up politically.
"I think where we can be a constructive force in this evolution is to obviously encourage whatever tendencies that we see move in that direction," Levin said.
