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interests, so as to avert the calamities that befell earlier generations. In this attempt, I am conscious of Maslow's caution that ‘It is tempting, if the only tool you have is a hammer, to treat everything as if it were a nail'. Financial markets cannot provide solutions to all the complex problems that arise in Great Power relations – indeed, policies that excessively favoured markets at the expense of communities may have contributed to many of the problems in the first place.

      That said, I haven't yet come across an analysis that considers fully, from both a top-down and bottom-up perspective, how the global financial system as we know it today is contributing to geopolitical tensions. Even less attention is paid to the diverse range of policies, regulations, infrastructures and conventions that support it. Without an appreciation of these and the history of how the system has come about, it is difficult to understand the full scope of the systemic financial challenges facing the world's two leading powers, much less devise effective strategies for navigating the treacherous waters we're in.

A number of leading authorities from different fields have recommended a variety of paths that could lead to a peaceful rebalancing of the Sino-US relationship. This book does not try to usurp those, but to supplement their specific perspectives with a practical perspective from the field of financial markets. What I can say with confidence though is that, without addressing the sources of financial and economic tensions, it is unlikely that other sources of conflict can be eliminated. I hope this book might help increase mutual understanding and offer some insights to assist policymakers in both the East and the West in the extremely difficult task of smoothing the course of China's integration into the international financial system during a tricky period of geopolitical adjustment.

      However, the book is not only targeted at policymakers. Be it in a liberal democracy or any other political system, leaders govern on behalf of their people. Every citizen has an interest in understanding the issues his or her country faces, so as to help ensure that leaders act in the best interests of society as a whole. The book has therefore been written in a way to make it accessible, without shying away from complexity. I hope it will be helpful in particular to those with an interest in international relations, finance, economic history, sociology and political science.

      Being of mixed Chinese and British heritage, I owe my very existence to globalisation and to the particularly tempestuous period of history that created China and Hong Kong as they are today. This has undeniably influenced my viewpoints. Another stroke of serendipity that has enriched my outlook – and my life more generally – was to have met my wife Yeone, an American with a love of her country. Through her, I have had the opportunity to better understand the US and re-examine some of my preconceptions. Having had the privilege of experiencing the best – and, on occasions, the worst – of contemporary China and America, I have a deep affection for both countries. Moreover, our two young sons will grow up both Chinese and American and, if for no other reason, this alone gives me an enormous vested interest in seeing the two nations thrive in harmony with each other. Yet, putting sentimentality aside, I believe that setting the right policies depends on making objective assessments of the facts.

At this point, readers should note that I held positions of influence in Hong Kong's financial markets strategy and policymaking between 2012 and mid-2021. Through this, I was directly involved in certain Chinese policy steps towards financial markets internationalisation that are discussed in this book. While I have made every effort to maintain objectivity, where there are failings in this regard, I hope that readers will be compensated through the insights afforded by a first-hand perspective.

      Over the course of human history, extreme inequality in the distribution of resources has tended to lead to conflict. The evolution of international trade and investment has, when conducted on the basis of sound rules and with the object of mutual benefit, raised humanity's collective standard of living and contributed to more peaceful coexistence between societies. Listening to the political rhetoric of late, it seems that some of our leaders may need a reminder of the lessons of history. This is my small contribution to that cause and I hope that readers will find this book entertaining, informative and thought-provoking.

      That all said, I am an optimist and believe firmly that, if we can successfully navigate the next steps of global financial integration, we can all look forward to a bright era of greater prosperity and security. We have no choice. The alternative is simply not something we want to contemplate.

      – James A. Fok

      Hong Kong

      10 September 2021

Note

      1 1. See (Allison, 2017).

Acknowledgements

      My first thanks must go to my wife Yeone, who initially encouraged me to write this book as a way of passing some spare time while stuck at home during the Covid-19 pandemic. She probably hadn't imagined that it would become such an engrossing diversion as to cause me to neglect most of my familial duties for many subsequent months. As I disappeared (at least mentally) into the research and writing, she only very occasionally complained about having to shoulder most of the burden of looking after our five-year-old twins. On top of that, Yeone reviewed the first draft of each section, asked a ton of questions, and pushed me to add colour to illustrate my arguments. I hope that the final work at least partially justifies her sacrifices.

      My next thanks go to Mark Bentley. Mark gave me my first job in financial services and has been a consistent friend and mentor ever since. While working on this book, I spent countless hours in conversation with him discussing many of the ideas contained in it. Mark and I have very different perspectives (he is an ardent free marketeer who talks of Milton Friedman in the same reverent tones reserved for saints of the church), but his impressive ability to dissect arguments and challenge the flaws in them undoubtedly improved the final work considerably.

This book also owes a huge debt to the work of the many authors and writers whose books, research papers and articles are listed in the bibliography. I now realise what an enormous amount of effort goes into all of this, and I am extremely grateful to each of them.

      Along the way, I have had a lot of help. Much of what I have learned about financial markets has come from former colleagues, business partners, professional advisors, regulators and clients. There are far too many to name each of them here, but I am deeply grateful to all those who have shared the highs and supported me through the lows of my career thus far, and to each and every one who has made my work so much fun over the years.

      Specifically in relation to this book, thanks go to Bryan Cheuk and Kenneth Lock, who helped with research on the economic and financial data that appear in it. I am also grateful to Alokik Advani, Andrew Bernard, Cheah Cheng Hye, Rebecca Chua, Fu Hao, Jeremy Grant, Patrick Jacquelin, Sue Johnson, Kai Keller, Paul Kennedy, Michael Lam, Li Yingying, Max Lummis, George Magnus, Michael Moser, James Muir, Edmund Ng, Lisa O'Connor, Matt O'Neill, Ketan Patel, Patrick Young and Zhou Bo, who reviewed various chapters and provided helpful feedback and encouragement.

      There are a number of people to whom I am particularly indebted for their extensive comments and advice.

      Mustansir Barma provided very detailed feedback on the draft manuscript and corrected several factual errors.

      Roland Chai urged me to consider more deeply how digital currencies might affect the future development of the global financial system. Adam Wielowieyski then introduced me to a wide range of research in this area and was exceedingly patient in answering my many questions. This effort was not only interesting and rewarding, but it also led me to change some of my final conclusions.

      Jonathan Chow provided insightful feedback on the structure of the book and editing advice, which put better focus on the key arguments. He also gave me some helpful suggestions on the title of the book and various sections.

      Nick Gardiner sent me pages of meticulously typed notes on the manuscript, with a huge number of valuable questions and suggestions.

      Katie

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