Economy

New US Law Could Force Chinese Companies to De-list

New US Law Could Force Chinese Companies to De-list”

The US Senate has approved new legislation that will require companies seeking a listing on a US exchange to establish they are not owned or controlled by a foreign government.

The China rhetoric in Washington is getting more hostile with the US President Trump shooting his first direct attack at China's Xi Jinping but there is also broader frustration in the financial markets over the lack of transparency from Chinese firms listed on US stock exchanges.

The Holding Foreign Companies Accountable Act bans companies from listing on U.S. exchanges if they fail to comply with audits by the Public Company Accounting Oversight Board for three years in a row.

"We can't let foreign threats to Americans' retirement funds take root in our exchanges", said Senator John Kennedy who introduced the bill in the Senate.

The US government and Congress have shown growing concerns that Chinese firms expanding business in the US are supported or controlled by China's government.

Nevertheless, the bill still has to pass the House of Representatives.

More news: United Kingdom to mass produce COVID-19 vaccine at its new £38Mn center

Alarm has grown in particular that United States money is bankrolling efforts by Chinese technology giants to develop leading positions in everything from artificial intelligence and autonomous driving to Internet data collection.

But the intensified US-China trade friction is the more fundamental reason. He merely wants Chinese public companies trading in the U.S.to be held to the same standards as their American counterparts.

They would be required to submit to an audit that can be reviewed by the Public Company Accounting Oversight Board, which has been objected to by China. Still, he said that cracking down could backfire and simply result in the firms moving to exchanges in London or Hong Kong. The Chinese coffee chain recently revealed that an internal probe found hundreds of millions of dollars of its sales in 2019 were fabricated.

"For too long, Chinese companies have disregarded USA reporting standards, misleading our investors".

A report in The South China Morning Post said that in order to comply with the requirements of the Bill, Chinese companies may have to break state secret laws in China. Rubio applauded the passage of the Kennedy-Van Hollen bill and said it incorporated aspects of a similar bill he introduced a year ago. The subjects of these legislation include the mass internment of Uygurs, cyber-security and Taiwan and the South China sea among others.



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