A bill targeting Chinese companies listed on U.S. exchanges could backfire on American investors.
President Donald Trump has a bill on his desk that could kick several Chinese companies off of U.S. stock exchanges and inflame an already strained relationship between Washington and Beijing. The Holding Foreign Companies Accountable Act would force companies to give up their listings on Wall Street if they refuse to open their books to U.S. accounting regulators. It could also bar them from raising money from American investors. While the law technically applies to companies from any country, it’s mainly targeting Chinese corporations. « U.S. policy is letting China flout rules that American companies play by, and it’s dangerous, » said Sen. John Neely Kennedy, R-La., in a statement. Chinese Foreign Ministry spokeswoman Hua Chunying said at a news conference this week that the bill politically oppresses Chinese firms. « Instead of setting up layers of barriers, we hope the U.S. can provide a fair and non-discriminatory environment for foreign firms to invest and operate in the U.S., » Hua said. But Chinese companies trading in the U.S. are no stranger to accounting scandals. Just this year, Luckin, a Chinese coffee chain that billed itself as a rival to Starbucks, was delisted from the Nasdaq after the company fabricated $300 million in sales. Why the U.S. has more to lose If the law is passed, it could affect companies like Alibaba, oil giant PetroChina, JD.com and more than 200 other names. Chinese companies listed on U.S. exchanges have a combined market capitalization of about $2.2 trillion, so a mass delisting would mean major movements of capital.
