Politicians at the U.S. House of Representatives gave their nod to a law that could effectively ban top Chinese companies from American stock exchanges if federal regulators aren't given access to examine their financial reports, Bloomberg News reported Thursday.
Major companies like Alibaba Group Holding and Baidu could be the first ones to be given the boot if they refuse to comply with the country's auditing policies, giving incumbent President Donald Trump a final leverage to intimidate Beijing before he exits the White House.
Called the "Holding Foreign Companies Accountable Act," the bill could be quickly placed on the Oval Office desk for final authorization. It gained bipartisan approval in the House after clearing the Senate in May.
Chinese companies have for years been dependent on access to U.S. capital markets, and more broadly to American currency-based finance, as a crucial funding element.
While the legislation covers companies from any nation, its backers intended it to specifically target Chinese companies listed on Wall Street, like Alibaba, tech group Pinduoduo and oil producer PetroChina Co.
A number of international companies have already complied with the U.S. mandate - except the Chinese.
According to Sen. John Kennedy, one of the bill's primary advocates, American policy is "allowing China to flout laws that U.S. companies play by, and that's dangerous," Bloomberg quoted him as saying in a statement.
Kennedy pointed out that Beijing was using American exchanges "to exploit" U.S. citizens. "The House joined the Senate in rejecting a toxic status quo," he emphasized in a statement.
The HFCAA may be one of the "most important investor protection pieces of legislation this year," California Democratic Rep. Brad Sherman, who heads the subcommittee that oversees capital markets on the House's financial services panel, said.
Chinese authorities have long been unwilling to allow overseas regulators to look into its local accounting firms, citing risks to national security.
