TAIPEI (Taiwan News) — The U.S. House of Representatives passed a bill on Wednesday (Dec. 2) that could prevent Chinese firms that fail to adhere to U.S. auditing standards from listing their shares on American stock exchanges.
The measure, the Holding Foreign Companies Accountable Act, passed by unanimous voice vote, after passing the Senate by unanimous consent in May, Reuters reported. The bill will now be sent to President Trump, who is expected to sign it into law.
The bill would require companies to disclose information about any ties to foreign governments and the Chinese Communist Party (CCP), and would remove them from U.S. exchanges after three years if they do not provide the U.S. Public Company Accounting Oversight Board (PCAOB) access to their audit information, The New York Times reported.
Republicans and Democrats have criticized the opacity of the Chinese financial system, maintaining that it puts U.S. investors at risk of being defrauded. Chinese law prohibits auditors from transferring certain financial information out of the country, which obstructs the ability of U.S. regulators to properly vet firms, according to The Times.
Several major Chinese companies do not follow U.S. regulatory standards, including Baidu (百度), China Mobile (中國移動), PetroChina (中國石油天然氣股份), and the Semiconductor Manufacturing International Corporation (中芯國際集成電路製造), according to the PCAOB.
Ahead of the house vote, Chinese Foreign Ministry spokeswoman Hua Chunying (華春瑩) described the bill at a press conference on Wednesday as a discriminatory policy that politically represses Chinese companies. “Instead of setting up layers of barriers, we hope the U.S. can provide a fair and non-discriminatory environment for foreign firms to invest and operate in the U.S.” she added.
Hua also said, “The right way to solve the problem is for all parties concerned to strengthen cross-border regulatory cooperation in a frank and open manner.” However, Chinese authorities have long been hesitant to let foreign regulators inspect local accounting firms, citing national security concerns, according to Reuters.