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The U.S. House of Representatives passed a law to kick Chinese companies off U.S. stock exchanges unless they fully comply with the country’s overhaul rules, giving President Donald Trump an extra tool to threaten Beijing before leaving office. .
The measure passed to the House by unanimous vote, after being passed to the Senate unanimously in May, sending it to Trump, who according to the White House should sign it into law.
It applies to companies in any country, but the sponsors of the legislation intended to target Chinese companies listed in the United States, such as Alibaba, the technology company Pinduoduo and the oil giant PetroChina.
The Trump administration added further economic pressure on China on Wednesday by banning cotton imports from a powerful Chinese quasi-military organization in Xinjiang which, in its opinion, uses forced labor from detained Uighur Muslims.
The US Customs and Border Protection Agency said “withholding the release order” would ban cotton and cotton products from the Xinjiang Production and Construction Corps (XPCC), one of China’s largest producers. XPCC produced 30% of China’s cotton in 2015.
The Chamber has passed audit measures under the Holding Foreign Companies Accountable Act, which prohibits the listing of securities of foreign companies on any U.S. stock exchange if they have not complied with audits of the U.S. Public Accounting Oversight Board for three consecutive years. .
Measures that take a tougher line on China’s business and trade practices generally pass Congress by a wide margin. Both Democrats and fellow Republicans of Trump echo the president’s stance against Beijing, which this year tightened as Trump blamed China for the coronavirus ravaging the United States.
At Wednesday’s Aspen Institute Cyber Summit, John Demers, the U.S. Department of Justice’s top national security official, said more than 1,000 Chinese researchers have left the U.S. amid a crackdown on United States on alleged technology theft.
William Evanina, head of the counterintelligence branch of the office of the US director of national intelligence, said at the same summit that Chinese agents were already targeting the personnel of President-elect Joe Biden, as well as “close people” to the team. Biden.
Democratic Senator Chris Van Hollen, who co-wrote the review bill with Republican Senator John Kennedy, said in a statement that American investors “were robbed of their money after investing in seemingly legitimate Chinese companies that they do not meet the same standards as other listed companies “.
Kennedy said China was using US trade to “exploit” the Americans. “The House has joined the Senate in rejecting a toxic status quo,” he said in a statement.
The act would also require public companies to disclose whether they are owned or controlled by a foreign government.
The American Securities Association praised the passage of the bill, saying it was necessary to protect Americans from “fraudulent companies controlled by the Chinese Communist Party.”
The Chinese embassy in Washington did not immediately respond to a request for comment. Chinese foreign ministry spokesman Hua Chunying said before the vote that it was a discriminatory policy that oppressed Chinese companies politically.
“Instead of creating layers of barriers, we hope 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 news conference.
A spokesperson for Alibaba pointed to a comment on the bill in May when it was approved by the Senate. Chief Financial Officer Maggie Wu told investors that the company “will strive to comply with any legislation whose purpose is to protect and bring transparency to investors buying stocks on US exchanges.”
Chinese authorities have long been reluctant to let foreign regulators inspect local accounting firms, citing national security concerns.
Officials from China’s Securities Regulatory Authority indicated earlier this year that they were willing to allow inspection of audit documents in some circumstances, but past arrangements aimed at resolving the dispute have not worked in practice. .
Shaun Wu, a Hong Kong-based partner of Paul Hastings law firm, said greater enforcement is likely against Chinese companies even when Biden becomes president in January.
He said that if the bill becomes law, “all Chinese companies listed in the US will have to face greater scrutiny by US authorities and inevitably consider all available options.”
This could include listing in Hong Kong or elsewhere, he said. Several Chinese companies listed in the United States, including Alibaba and Chinese operator KFC Yum China, recently made secondary listings in Hong Kong.
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