The U.S. government is just one step away from enacting a law that could ‘kick’ several Chinese firms off Wall Street, which can further escalate tensions between Washington and Beijing.
According to a report by the Cable News Network (CNN) on Thursday, the U.S. House of Representatives had passed a Bill to that effect on Wednesday.
The Bill seeks to enact a Law that would prevent companies that refuse to open their books to U.S. accounting regulators from trading on U.S. Stock exchanges.
The Bill is right now only awaiting President Donald Trump’s signature to become Law.
The Bill states that the companies would be removed from the U.S. exchanges after three years if they did not provide U.S. regulators access to their audit information.
Though the Bill would apply to any foreign country, the focus on China is obvious, as Beijing has resisted such scrutiny.
All U.S.-listed public companies would also be required to disclose whether they are owned or controlled by a foreign government, including China’s Communist Party.
The bipartisan co-sponsors of the legislation said earlier this year that their goal was to ‘kick deceitful Chinese companies off U.S. exchanges’.
The U.S. scrutiny intensified following a scandal involving Luckin Coffee, the Chinese coffee firm that disclosed massive accounting irregularities this spring, which was kicked out of the NASDAQ in June.
Politicians from both parties in the U.S. have criticised China’s lack of transparency in its financial system, saying it could be putting American investors at risk of fraud.
This legislation would give Trump yet another way to put pressure on China before he leaves office in January.
The Trump administration has targeted companies like TikTok and forced Huawei into a fight for survival and banned Americans from investing in some Chinese firms.
Meanwhile, several Chinese companies have been preparing contingency plans in the light of the heightened scrutiny from the United States, the report says.
Since the start of the COVID-19 pandemic, tensions have been rising between the two countries over the issue of trade, Hong Kong legislation, origins’ of the virus and Beijing’s rising military aggression.
Amid the escalation, the State Department under Trump and Secretary of State Mike Pompeo has pursued staunch policy measures against the Chinese government.
On Thursday, the Trump administration reduced the U.S. visitor visas validity period for the Chinese Communist Party (CCP) officials and their family members from 10 years to one month.
The U.S. Department of Defense (DoD) on the same day blacklisted four more Chinese firms from accessing military tech, labelling them as being controlled by the Chinese military.
These moves are among the series of actions taken by the Trump administration, setting a tone for the U.S. President-elect Joe Biden taking office in January.