Political virus looks set to infect US stock markets: China Daily editorial

Although the bill the US Senate passed last Wednesday is called the Holding Foreign Companies Accountable Act, its sponsor Louisiana Republican Senator John Kennedy has made it clear that it targets Chinese companies.

The act requires companies listed on US stock markets to certify that "they are not owned or controlled by a foreign government", and submit their audits for inspection by the Public Company Accounting Oversight Board, the nonprofit body that oversees the audits of all US companies seeking to raise money in the markets. And it stipulates that failure to provide the information for three consecutive years will lead to delisting.

Although it still needs to pass the House of Representatives and receive the signature of the US president to become law, the unanimous bipartisan support it has received from the Senate and the rising antagonism displayed toward China by the US administration suggest that will only be a matter of time. After that, the US Securities and Exchange Commission will roll out detailed implementation rules to give teeth to the law.

The document on the United States' strategic approach to China unveiled by the White House on the same day, which lays bare its ill intentions toward China, and the rising anti-China sentiment the administration has fostered in the United States means the passing of such an act is not a surprise; it is simply another screw being turned to put maximum pressure on China.

As the China Securities Regulatory Commission said in a statement, the act is not based on "professional considerations" in securities regulation, and it ignores "the long-term efforts of both countries" to enhance cooperation in audit regulation — currently the work of Chinese auditors is not submitted for outside review, but the Chinese securities watchdog provided specific proposals to the Public Company Accounting Oversight Board last year on making joint inspections of accounting firms.

In other words, in passing the act, the US Senate is trying to halt the already-there cooperation proposals between the two countries on securities regulation, which should be conducted through friendly consultations on an equal footing and in line with international common practices of cross-border cooperation on audit regulation.

There are about 165 Chinese companies listed on US exchanges that could ultimately be affected by the legislation, many of which are fast growing internet companies whose remarkable growth directly benefits the US market and investors. With about 55 percent of their market value held by non-Chinese investors, it will mainly be the US market and investors that will bear the brunt of the forthcoming law if Chinese companies are forced to exit the US stock markets.

While China is opening up its financial sector and improving its business environment, the US is going the other way. After putting the economy before lives, decision-makers in the country are now putting politics before the economy.