(Headline USA) Chinese companies will have to disclose more information about audits and whether they are controlled by a government or else leave U.S. stock markets under a rule approved by securities regulators.
The rule approved by the Securities and Exchange Commission steps up a long-running standoff between Washington and Beijing over how much information companies with U.S.-traded shares must disclosed.
Companies that used an auditor in a foreign jurisdiction will be required to confirm they are not “owned or controlled by a government entity” there, according to the SEC. Companies also will be required to disclose additional information in annual reports.
“Trading prohibitions” can be imposed on some companies, the SEC said.
It’s unclear, however, how seriously the rule would be taken under a Biden administration that has repeatedly bowed to pressure from the Chinese dictatorship and is routinely mocked by the same.
And as the Xi regime digs its claws deeper into every aspect of trade, U.S. businesses and companies are feeling the bite. A leading authority on business in China, China Beige Book CEO Leland Miller, has indicated that the days of easy business with China are likely done, and pursuing business in China today is “a very dangerous thing to do.”
Other governments cooperate with U.S. demands for more financial details from companies to prevent false reporting. But Beijing, citing security concerns, refuses to allow the U.S. Public Companies Accounting Oversight Board to review work of Chinese auditors.
China’s government criticized the move and warned it might block American investors from access to fast-growing companies.
The measure is an attempt to “politically suppress Chinese companies” and “contain China’s development,” said a foreign ministry spokesman, Zhao Lijian.
“We are firmly opposed to that,” Zhao said.
Hundreds of Chinese companies have raised tens of billions of dollars in U.S. financial markets, but their status is a matter of growing dispute with Beijing.
The latest rule applies to audit firms the PCAOB is “unable to inspect or investigate,” the SEC said, a group that would be mostly Chinese.
Separately, the U.S. government earlier barred Americans from investing in the stocks, bonds and other securities of Chinese companies deemed to be linked to the ruling Communist Party’s efforts to upgrade its military technology.
Adapted from reporting by the Associated Press
