- The bill seeks to delist Chinese companies who don’t abide by US accounting laws.
- “We can't let foreign threats to Americans' retirement funds take root in our exchanges,” said Senator John Kennedy who introduced the bill in the Senate.
- The bill also comes in the backdrop of the Luckin Coffee incident, wherein the company falsified $310 million in sales and received a delisting notice on May 19.
- The bill comes at a time when the US-China tensions have been rising due to the COVID-19 pandemic, with Trump saying that he’s having
The bill seeking to delist Chinese companies was introduced by John Kennedy, a Republican, and Chris Van Hollen, a Democrat. Signalling bipartisan support, the Senate passed the bill unanimously. It would also require companies to certify that they’re not under the control of a foreign government.
Shares of Chinese e-commerce giant Alibaba saw its US-listed shares fall more than 2% after the development.
Also read: Trump is blaming China for coronavirus even as he employs the same authoritarian tactics as Xi Jinping
Coincidentally, Luckin Coffee, a Chinese company received a delisting notice from Nasdaq after it was revealed that the company had falsified sales worth $310 million.
Although the law can be applied to any foreign company, lawmakers have said that the move to strengthen disclosure requirements was aimed at China.
"The Chinese Communist Party cheats, and the Holding Foreign Companies Accountable Act would stop them from cheating on US stock exchanges," Kennedy, a member of the Senate Banking Committee, said on Twitter.
"We can't let foreign threats to Americans' retirement funds take root in our exchanges,” he added.
The passing of the bill is a reflection of the growing anger among US lawmakers towards China and its handling of the coronavirus pandemic.
“We just want Chinese companies to play by the same rules as everybody else. This is an important step forward for transparency,” said Senator Chris Van Hollen to Yahoo Finance.
The White House last week directed the federal retirement savings body to halt investments in Chinese companies which is seen as the beginning of a financial war in addition to the trade war already on between the two countries.
Labor Secretary Eugene Scalia had warned that plans to invest federal savings would place "billions of dollars in retirement savings in risky companies that pose a threat to US national security".
The bill still needs to pass through the Congress
Although the US Senate has introduced and passed the bill to delist Chinese companies, it still needs to pass through the Congress and be signed by Trump to become law.
However, given the increasing anti-China rhetoric from the US administration, and more specifically Trump, there are chances that this bill could sail through the Congress, more so when it received bipartisan support in the Senate.
Trump also seems to be having second thoughts about the US-China trade bill signed in January. “I feel differently now about that deal than I did three months ago. We’ll see what all happens,” he said.
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