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US lawmakers to hold hearing on risks posed by Beijing's crackdown on Chinese companies

Hearing comes amid reports China’s biggest tech firms may be restricted from American markets soon

Trader works on the floor of the New York Stock Exchange, Friday, July 23, 2021. 

Trader works on the floor of the New York Stock Exchange, Friday, July 23, 2021.  (AP photo)

TAIPEI (Taiwan News) — A U.S. House of Representatives panel will stage a hearing on Wednesday (Sept. 22) to investigate new risks related to Chinese companies listed on U.S. markets, the committee announced on Tuesday (Aug. 31).

The Subcommittee on Investor Protection, Entrepreneurship and Capital Markets has named the meeting “Taking Stock of ‘China, Inc.’: Examining Risks to Individual Investors and the US Posed by Foreign Issuers in US Markets,” according to Al Jazeera.

The hearing comes amid Beijing's ongoing crackdown on Chinese firms, which has triggered a wave of investor panic around the globe and caused massive swings in the stock prices of Chinese companies listed on American exchanges.

On Monday (Aug. 30), China announced it would limit the amount of time children under the age of 18 can spend playing video games.

Chinese authorities said gaming platforms can only offer their services to minors in China on Fridays from 8 p.m. to 9 p.m., weekends, and public holidays. This caused Chinese, South Korean, and Japanese gaming stock prices to dive.

The Nasdaq Golden Dragon China Index — which tracks 98 of the biggest Chinese companies listed in the U.S. — plunged on Aug. 19 after China’s State Administration for Market Regulation released draft rules focused on preventing unfair online competition. The index is down by more than 26% compared to this time last year, according to Al Jazeera.

More restrictions are likely to come. A Guardian report on Friday (Aug. 27) suggested Beijing is planning further action against tech firms by forcing them to get official approval for initial public offerings (IPOs) outside China. This could see some of China’s biggest firms abandon their American stock listings by the end of the year, according to analysts.

Earlier in August, the U.S. Securities and Exchange Commission (SEC) issued its own warning to investors about the risks of investing in Chinese companies. SEC Chair Gary Gensler asked his staff to take “a pause for now” in approving IPOs for Chinese firms looking to list in the country.

Updated : 2021-09-17 17:43 GMT+08:00