File photo of United States Capitol. Photo | Pixabay
File photo of United States Capitol. Photo | Pixabay
Text Size:

Washington: The Senate overwhelmingly approved legislation Wednesday that could lead to Chinese companies such as Alibaba Group Holding Ltd. and Baidu Inc. being barred from listing on U.S. stock exchanges amid increasingly tense relations between the world’s two largest economies.

The bill, introduced by Senator John Kennedy, a Republican from Louisiana, and Chris Van Hollen, a Democrat from Maryland, was approved by unanimous consent and would require companies to certify that they are not under the control of a foreign government.

U.S. lawmakers have raised red flags over the billions of dollars flowing into some of China’s largest corporations, much of it from pension funds and college endowments in search of fat investment returns. Alarm has grown in particular that American money is bankrolling efforts by the country’s technology giants to develop leading positions in everything from artificial intelligence and autonomous driving to internet data collection.

Shares in some of the biggest U.S.-listed Chinese firms, including Baidu and Alibaba, slid Thursday in New York while the broader market gained.

If a company can’t show that it is not under such control or the Public Company Accounting Oversight Board isn’t able to audit the company for three consecutive years to determine that it is not under the control of a foreign government, the company’s securities would be banned from the exchanges.

“I do not want to get into a new Cold War,” Kennedy said on the Senate floor, adding that he wants “China to play by the rules.”

“Publicly listed companies should all be held to the same standards, and this bill makes common sense changes to level the playing field and give investors the transparency they need to make informed decisions,” Van Hollen said in a statement. “I’m proud that we were able to pass it today with overwhelming bipartisan support, and I urge our House colleagues to act quickly.”

House Bill

In a sign of broad support for the measure, Representative Brad Sherman, a California Democrat on the House Financial Services Committee, introduced a companion bill in that chamber. Sherman said in a statement that Nasdaq moved this week to delist China-based Luckin Coffee after executives at the company admitted fabricating $310 million in sales between April and December 2019.

“I commend our Senate counterparts for moving to address this critical issue,” Sherman said. “Had this legislation already been signed into law, U.S. investors in Luckin Coffee likely would have avoided billions of dollars in losses.”

House leaders are discussing the legislation — and a separate Senate-passed bill to sanction Chinese officials over human rights abuses against Muslim minorities — with lawmakers and members of the relevant committees, a Democratic aide said.

The Senate measure — S. 945 — is an example of the rising bipartisan pushback against China in Congress that had been building over trade and other issues. It has been amplified especially by Republicans as President Donald Trump has sought to blame China as the main culprit in the coronavirus pandemic.

GOP lawmakers have in recent weeks unleashed a torrent of legislation aimed at punishing China for not being more forthcoming with information or proactive in restricting travel as the coronavirus began to spread from the city of Wuhan, where it was first detected.

Trump escalated his rhetoric against China on Wednesday night, suggesting that leader Xi Jinping is behind a “disinformation and propaganda attack on the United States and Europe.”

“It all comes from the top,” Trump said in a series of tweets. He added that China was “desperate” to have former Vice President Joe Biden win the presidential race.

Kennedy told Fox Business on Tuesday that the bill would apply to U.S. exchanges such as Nasdaq and the New York Stock Exchange.

“I would not turn my back on the Chinese Communist Party if they were two days dead,” Kennedy said. “They cheat. And I’ve got a bill to stop them from cheating.”

At issue is China’s longstanding refusal to allow the PCAOB to examine audits of firms whose shares trade on the New York Stock Exchange, Nasdaq and other U.S. platforms. The inspections by the little-known agency, which Congress stood up in 2002 in response to the massive Enron Corp. accounting scandal, are meant to prevent fraud and wrongdoing that could wipe out shareholders.


Also read: Trump launches direct attack on China’s Xi Jinping as fight over virus gets ugly


Clash

Since then China and the U.S. have been at odds on the issue even as companies including Alibaba and Baidu have raised billions of dollars selling shares in American markets. The long-simmering feud came to the forefront last year as Washington and Beijing clashed over broader trade and economic issues, and some in the White House have been urging Trump to take a harder line on the audit inspections.

Last week, Trump said in an interview on Fox Business that he’s “looking at” Chinese companies that trade on ⁦the NYSE and Nasdaq exchanges but do not follow U.S. accounting rules. Still, he said that cracking down could backfire and simply result in the firms moving to exchanges in London or Hong Kong.

While not technically part of the government, the PCAOB is overseen by the Securities and Exchange Commission. The ability to inspect audits of Chinese firms that list in the U.S. is certain to come up at a roundtable that the SEC is holding July 9 on risks of investing in China and other emerging markets.

Senators Kevin Cramer, Tom Cotton, Bob Menendez, Marco Rubio and Rick Scott are also sponsors of the bill. Rubio applauded the passage of the Kennedy-Van Hollen bill and said it incorporated aspects of a similar bill he introduced last year.

“I was proud to work with Senator Kennedy on this important legislation that would protect American retail investors and pensioners from risky investments in fraudulent, opaque Chinese companies that are listed on U.S. exchanges and trade on over-the-counter markets,” Rubio said in a statement. “If Chinese companies want access to the U.S. capital markets, they must comply with American laws and regulations for financial transparency and accountability.”

According to the SEC, 224 U.S.-listed companies representing more than $1.8 trillion in combined market capitalization are located in countries where there are obstacles to PCAOB inspections of the kind this legislation mandates.-Bloomberg


Also read: Covid may be watershed, but from Bush to Clinton, US has accommodated China for years now


 

ThePrint is now on Telegram. For the best reports & opinion on politics, governance and more, subscribe to ThePrint on Telegram.

Subscribe to our YouTube channel.

25 Comments Share Your Views

25 COMMENTS

  1. So does this classify as A Racist action ? Or does it mean that Budweiser , Toyota , Samsung , Nissan and a few thousand others will no longer show up on our stock exchange ? What suddenly happened to the GLOBAL ECONOMY and the GLOBAL EXCHANGE . .
    Stupid people making stupid decisions !

  2. Shame on everyone in government who looked the other way or supports china .Shame on the leftist controlled education unions who sold their own country out !!This is why political correctness is destroying our youths minds into believing in socialism and communism

  3. Pfft a stupid attempt to close the barn door after the cows are gone.
    OTHER stock exchanges will continue to list Chinese firms and GLADLY take business from the Idiot Americans who dug their own grave by off shoring their manufacturing DECADES ago.
    The Americans/ AKA AIPAC duel citizen Jews are waking up to the fact that Goldmansacks etc has no sway or influence with the Chinese people who never bought into the European fairy tales of Jesus or Jews or Allah or White supremacists….none of that slanted propaganda works on the Chinese people who view the Hindus as insane superstitious nut job primitives.
    Nope the Brits made Deep enemy’s of China with its Opium war and the American’s are deeply racist colonial imperialists the same as the Brits…so dont expect China to show ANY MERCY in Trade Technology or its Expansion into the South China Sea .
    The Europeans Burnt their bridges in Africa and South America even CENTRAL America….which the Chinese are exploiting by opening up markets and government cooperation.
    Soon the GREAT SILK ROAD – will be in operation tying together All of Asia with Russia the Stans and EUROPE by passing America’s Trouble spot of the AIPAC elite Fight with their eternal enemy the Arab tribes.
    The evangelical base in America will continue to provide cannon fodder for their zealots in a never ending macabre black hole of death.
    Ban Chinese Firms from American stock exchanges?? HA now that is a JOKE

  4. We should cut them off completely. No new immigration, no business, make our goods here at home. And then laugh as they crumble.

  5. Kudos to Mr Trump & US senator’s..
    Let all countries take immediate steps to stop importing items from China.
    Let China feels the inner burning
    India at 135+ crore people, have huge domestic consumption. Increase local manufacturer inside country.

  6. It is time China be made accountable .
    It is getting away all the time with its dont care attitude. All countries of the world unite

  7. A very important step by US to deoust Chinese companies. This needs to be followed by other countries as well. The way China has caused irreparable loss of human lives & economies world wide, a strict action is much essential for it. If the rest of the world gets United, the back bone of China will get damaged. It’s time for the world to come forward and take every necessary step in this direction at earliest.

  8. Every country in the world has to look out for the best interest of their citizens. Even though I don’t like Trump’s middle east policy but I do love America the land of the free and the home of the brave. I believe Trump is protecting American businesses and the American people. Again even though I am not fan of Trump but I have no choice but to vote for him because I love America and salute the old glory.

  9. Great Move to stop China in every front .
    China is the worst country and can do anything . Exporting cheap material and poor quality of thier products and raw naterials .

  10. US again muscling into territory without thinking.They are acting like Big Brother and whatever they say goes and the Herd follows blindly.China working with few Nations and Brics block of countries are already working with Digital payments system where Dollar is not considered relevant.Dumb senators have no clue and are just follwing their dumb president.

  11. It’s about time we got someone in office to straighten out the corruption that has plaques our government for so many years.
    It’s also a shame that the public has been mislead into believing in our Left-wing liberals who own the major network’s.
    Reminds me of Nazi Germany and how they had many people believing in Hitler’s regime.

    The antics of the left will be exposed soon enough even as they backpedal trying to cover up everything they have done.
    They will in turn point the finger at the Republicans and lie and twist things like they normally do to avoid the truth to the public.

    The Republicans aren’t perfect but they are not near as bad as those who promote sin and use TV as a method to get people to think everything is good with them.
    Satan couldn’t have done it better !!!
    Which he’s loving every minute of it 🔥😈

    • You mean like what you’re doing right now? Probably not old enough to remember that it was Republican Richard nixon who started all of this by opening up dealing with a communist country. And pushed by Republican leaning corporate America so they could pay pennies to workers to make their crap there and bring it back here and gouge us with inferior products.

  12. Do we see what happens when Pelosi and Schumer get out of the way?
    Is Van Hollen of Md. sure he is a democrat? What he and Kennedy of La. just did is what we expect from REAL Americans!
    Let’s KEEP AMERICA GREAT!

LEAVE A REPLY

Please enter your comment!
Please enter your name here