United States President Donald Trump has signed a legislation with a potential to kick Chinese companies off of U.S. exchanges unless American regulators can review their financial audits.
The measure, which could affect corporate giants like Alibaba Group Holding Ltd. and Baidu Inc., is yet another parting shot at China before Trump leaves office in January.
The de-listing law won bipartisan support in the House early this month after clearing the U.S. Senate in May. While it applies to any foreign company, the bill’s sponsors have said their goal was to target China.
For years, Chinese firms have used American capital markets and dollar-based finance as a key funding component to grow their businesses. While the measure includes a phase-in period, with penalties kicking in after three straight years of noncompliance, it could impose real damage on Chinese companies that fail to meet the audit standards.
“U.S. policy is letting China flout rules that American companies play by, and it’s dangerous,” Republican Senator John Kennedy of Louisiana, a lead sponsor of the new law, said in a statement.
Foreign Ministry spokeswoman Hua Chunying told reporters in Beijing after passage of the House bill that China was “against politicizing securities regulation” and urged cooperation to protect investors’ rights.
“It will undermine global investors’ confidence in the U.S. capital markets and will undermine the U.S. capital markets’ global standing and hurt U.S. interests,” Hua said.
Trump’s signing of the law capped a flurry of recent steps against China, including guidelines that would limit travel visas for 92 million Communist Party members. Any of them with a 10-year visa would now see it reduced to one month.
The U.S. Department of Homeland Security has said that customs officers at American ports would impound “shipments containing cotton and cotton products originating from” the Xinjiang Production and Construction Corps., a military-affiliated entity that’s one of China’s largest producers.