Riding a wave of “Anti-China” sentiment the United States Senate passed a bill that primarily could ban Chinese firms from listing their shares on the U.S exchange. While the Bill will soon be voted on in the House of Representative, many believe that they the bill can end up hating the United States financially more than it could hurt China.
The bill states that “it would be mandatory for these companies to certify they are not owned or controlled by a foreign government and be subjected to audits by U.S. regulators for three consecutive years. If not, they would be banned from trade on the exchanges.”
Jesse Fried, a professor of law at the Harvard Law School told news reporters on Tuesday that while the goal of this legislation will be to protect American interest, he’s not sure that the bill would actually be beneficial to protect American investors finances. While the bill passed the Senate, he also believes that there is a good chance that the bill will not become a law.
“Because, in my view, it’s highly unlikely that China is going to allow inspections of audits done in mainland China,” Fried explains. “This will cause the stock prices of these firms to fall. The people controlling these firms will then be able to take these firms private at a very low price to the disadvantage of American investors and then re-list the firms in Hong Kong, or mainland China or elsewhere.”
He further warns that if the bill does become a law, it could backfire. Fried also quotes that the bill would most likely be opposed heavily by Wall Street. The bill has not been put to vote in the Democrat-controlled House. Furthermore, if the House passes the bill it would be difficult for President Trump to veto the law as he would be caught in a crossfire of emotions and finances.