US House Passes Bill On Scrutinising Chinese Companies

As an attempt to scrutinize the financial relations with China, the House of Representatives has passed a bill requiring the companies to disclose information about any ties to foreign governments and the Chinese Communist Party. 

The bill, Holding Foreign Companies Accountable Act, which was passed on Wednesday and now awaits US President Donald Trump’s sign. The House approved legislation that could lead to Chinese companies including behemoths like Alibaba Group Holding Ltd. and Baidu Inc. getting kicked off U.S. exchanges if Washington regulators aren’t allowed to review their financial audits.

Politicians from both parties have criticised China’s lack of transparency in its financial system, saying it could be putting American investors at risk of fraud. Chinese law restricts auditors from transferring certain company financial information out of the country, limiting its visibility to U.S. regulators.

Under the new legislation, they could eventually be pushed off American stock exchanges if China does not change its financial practices. Senator John Kennedy, the Louisiana Republican who sponsored the bill in the Senate, said U.S. policy had permitted China to “flout rules that American companies play by,” creating a dangerous situation for American investors in public companies. Today, the House joined the Senate in rejecting a toxic status quo, and I’m glad to see this bill head to the President’s desk,” Kennedy said.