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The US House of Representatives has passed a law to kick Chinese companies from US stock exchanges if they do not fully comply with the country’s audit rules, giving President Donald Trump one more tool to threaten Beijing before he leaves office .
The measure was passed by the House unanimously, after passing the Senate unanimously in May, sending it to Trump, who the White House said should sign it into law.
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The Holding Foreign Companies Accountable Act prohibits securities of foreign companies from being listed on a US stock exchange if they have failed to comply with US Public Accounting Oversight Board audits for three consecutive years.
While this applies to companies in all countries, the promoters of the legislation intended to target Chinese companies listed in the United States, such as Alibaba, tech company Pinduoduo Inc, and oil giant PetroChina Co. Ltd.
Measures that toughen Chinese business and business practices usually pass through Congress with large margins. Democrats and Trump’s Republican colleagues echo the president’s hard line against Beijing, which has grown fiercer this year as Trump blames China for the coronavirus ravaging the United States.
Democratic Senator Chris Van Hollen, who co-drafted the bill with Republican Senator John Kennedy, said in a statement that US investors “had been cheated out of their money after investing in seemingly legitimate Chinese companies that didn’t are not required to meet the same standards as other publicly traded companies. “
THE HOUSE TO VOTE ON THE BOOTING OF CHINESE STOCKS OF THE UNITED STATES ON AUDIT RULES
Kennedy said China was using US stock exchanges to “exploit” Americans. “The House has joined with the Senate in rejecting a toxic status quo,” he said in a statement.
The law would also require public companies to disclose whether they are owned or controlled by a foreign government.
The American Securities Association hailed the passage of the bill, saying it was necessary to protect Americans from “fradulent corporations controlled by the Chinese Communist Party.”
“NON-DISCRIMINATORY ENVIRONMENT”
The Chinese Embassy in Washington did not immediately respond to a request for comment. Chinese Foreign Ministry spokeswoman Hua Chunying said before the vote that it was a discriminatory policy that politically oppresses Chinese companies.
“Instead of putting up layers of barriers, we hope that the United States can provide a fair and non-discriminatory environment for foreign companies to invest and operate in the United States,” Hua said at a press conference. .
A spokesperson for Alibaba highlighted a comment on the May bill, when it was passed by the Senate. Chief Financial Officer Maggie Wu told investors the company “will endeavor to comply with any legislation aimed at protecting and bringing transparency to investors who buy securities on US stock exchanges.”
STATE DEPARTMENT ALERT MAJOR US COMPANIES ON HUMAN RIGHTS ABUSE IN CHINA
Chinese authorities have long been reluctant to let foreign regulators inspect local accounting firms, citing national security concerns.
Officials from China’s securities regulator said earlier this year that they were willing to allow inspection of audit documents under certain circumstances, but agreements made to resolve the dispute have failed. worked in practice.
Shaun Wu, a partner at Hong Kong-based law firm Paul Hastings, said an increase in sanctions against Chinese companies was likely, even though Democrat Joe Biden will become president in January.
He said that if the bill becomes law, “all Chinese companies listed in the United States will come under more scrutiny by US officials and will inevitably consider all available options.”
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This could include listing in Hong Kong or elsewhere, he said. Several Chinese companies listed in the United States, including Alibaba and operator KFC China Yum China, recently performed secondary listings in Hong Kong.
(Reporting by Patricia Zengerle; additional reporting by Alex Alper in Washington and Alun John in Hong Kong; Editing by Alistair Bell, Chris Sanders and Lincoln Feast.)
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