Chinese Firms Feel Pressure from both Beijing and Washington.
It is unfolding very fast. Chinese firms are reconsidering their presence on American exchanges, a complete reversal of a trajectory that up until recently saw China-based firms piling into markets in the United States and elsewhere outside of China. According to estimates prepared by the American Enterprise Institute, the de-listing trend has already reduced the market capitalization of Chinese firms listed in America by half. Similar movements have taken hold in other western stock markets and even in Hong Kong. The Chinese presence will shrink farther and may even go to zero. Practically speaking, the trend may have little effect on financing, because direct investment in China from the United States is rapidly providing a substitute for the funds once raised in western markets. This dramatic shift has its roots in data. The U.S. Securities and Exchange Commission (SEC) has demanded more disclosure – more data — than in the past, while the authorities in Beijing have become increasingly secretive about giving data to anyone, much less the American authorities. Companies caught between such impossible demands have asked for concessions from both the U.S. and Chinese authorities and, receiving none from either until very recentry, have had little choice but to de-list. Actually, official American demands have not changed. What has changed is the zeal for enforcement at the SEC. For years, the authorities in Washington demanded full disclosure from listed Chinese companies, as it does from all listed firms, American and foreign.
