Trump Signs Bill That Could Deliver Chinese Companies From U.S. Stock Exchange

President Donald Trump on Friday signed legislation that could expel Chinese companies from U.S. exchanges if American regulators are not allowed to review their financial scrutiny.


The “Foreign Company Accountability Act” requires companies to certify that they are not owned or controlled by a foreign government and to allow the U.S. Board of Public Accountability Audit to review its financial audits.

While the legislation applies to companies from any country outside the U.S., it is clear that the bill’s measures are aimed at Chinese companies, such as Alibaba Group, Pinduoduo and PetroChina. The companies have a three-year grace period to comply with the requirement before facing the risk of losing access to U.S. stock markets, a major source of capital for the companies.

The bill will almost certainly increase tensions between China and the US as President Trump prepares to step down next month. Chinese authorities have banned foreign regulators from inspecting local accountancy firms, citing national security concerns.

The step passed the House by a unanimous vote after passing the Senate in another unanimous vote in May this year. Strongly opposed legislation against China has garnered bipartisan support this year amid rising tensions between the two largest economies in the world.

Before the US President signed the bill, Chinese Foreign Ministry spokeswoman Hua Chunying told reporters, “It will undermine global investor confidence in U.S. capital markets and boost from the global position of U.S. capital markets and will hurt U.S. interests. ”

In anticipation of the legislation, Chinese companies have followed high-ranking listings in Hong Kong as a hedge against the possible ban on trading their shares in the U.S.

Alibaba, NetEase and Yum China have already listed their shares in Hong Kong. The city’s stock exchange will end the year as the world’s second-largest IPO market after raising $ 50 billion in new listings, according to data compiled by KPMG.