Chinese public companies in the US will have to become more transparent

As widely expected, US President Donald Trump has signed a law that would allow Chinese companies to be removed from American exchanges if they fail to comply with US audit oversight rules. The law, called the Holding Foreign Companies Accountable Act, requires companies to disclose more information about any links they may have with foreign governments and the Chinese Communist Party. US authorities will remove these companies from US exchanges after three years if they do not provide access to their audit information during that period. The bill was passed by the Senate in May and the US House of Representatives earlier this month. It was originally proposed by Republican Senator John Kennedy last year to protect American investors from less transparent Chinese companies. "Communist China is now using the US stock exchanges to exploit American workers and families - people who are putting their retirement and college savings into public corporations," Senator Kennedy wrote in a press release Wednesday after the House passed the law had passed. The law applies to all foreign companies listed on US stock exchanges, but is clearly directed against Chinese companies, whose opacity US regulators have been fighting for decades, while Beijing continues to insist that the books be opened on behalf of the national ones Security and state secrets is not possible. China's Ministry of Commerce said it is against the move and will take necessary measures to protect the interests of Chinese companies without explaining the measures. There are currently 217 Chinese companies with a total market capitalization of $ 2.2 trillion listed on the major US stock exchanges. However, many large Chinese companies like Alibaba, China Mobile and PetroChina do not adhere to US regulatory standards. According to the latest report by the US-China Economic and Security Review Commission, sixteen Chinese companies have withdrawn from the US stock exchanges since February last year. Chinese companies aren't as concerned about the new legislation as many already have secondary listings in Hong Kong or at home. Rather, China's tech firms have enough worries at home that the new law, signed by Trump, is unlikely to make too many waves. In its own country, China is targeting its fintech giants, who have grown too big and too fast for the Community Party to keep up. China's market regulator has now launched an investigation into Jack Ma's Alibaba business practices for potentially anti-competitive behavior. The authorities have also directed Ma's other online financial firm, Ant Group, to more or less find a way to become less threatening. This is a double-edged sword for China, which has also used these tech giants to create Chinese power centers of global tech dominance and to curb them when they become too influential. When Jack Ma publicly criticized bank officials and regulators in early October, it sparked a backlash at the highest levels, starting with regulators stopping Ant's IPO just a day ahead of its scheduled date and putting in new rules for granting microcredit to Ant to put them in their place. Bloomberg reported that stocks in the country's big tech companies have fallen sharply in the past few days, with Alibaba, Tencent, JD.com and Meituan losing around $ 200 billion in value.