SOURCE / ECONOMY
US toughens crackdown on listed Chinese firms as Trump buries political hurdles for Biden, analyst says
Published: Jan 09, 2021 05:35 PM

SMIC Photo: VCG


 The US off-exchange trading platform operator OTC Markets Group announced to stop trading in 12 Chinese shares including the Semiconductor Manufacturing International Corporation (SMIC), as the US President Donald Trump toughened its crackdown on listed Chinese companies in the last few days of his presidency.
 
Experts said that such sanctions would hurt the US market’s reputation, not only among Chinese companies that had planned to list in the country, but also companies in other countries, as they fear their listings would also be affected by political volatility once they get listed on US bourses.
 
According to a Reuters report on Friday, the OTC Markets Group said that quoting in nine symbols including those of China Railway Construction Corp and SMIC would no longer be available on its platform starting from Thursday. It will ban the trading of another three Chinese securities effective from Monday.
 
Xi Junyang, a professor at the Shanghai University of Finance and Economics, said the OTC Markets Group’ decision should be another example of US companies being forced by the Trump administration’s policies to take action against Chinese listed firms.
 
“For US stock trading platforms, they do not want to see a halt of stock trading on their platforms in fear of losing liquidity and investor confidence, but they have limited capabilities to stand up against US government orders,” Xi said.
 
According to him, the sanctions would make Chinese companies hesitant to list on US markets, while companies from other countries would also have worries about whether it is safe and stable to make a listing on US markets if political relations between the US and their countries worsen in a way like the current China-US friction.
 
“It surely undermines the attraction of US OTC markets with such non-marketized intervention,” Xi told the Global Times.
 
A large number of Chinese companies have listed on the US OTC market which is known to have lower listing requirements than major markets like the New York Stock Exchange. SMIC didn’t respond to an interview request from the Global Times as of press time.
 
On Wednesday, the NYSE also said that it would delist three Chinese companies listed on the board, reversing its decision earlier that it would allow the Chinese companies to remain on the board.
 
Their decision to drive Chinese companies away from US stock boards came after the Trump administration blacklisted 35 Chinese companies, which they claimed to be owned or controlled by the Chinese military. The US is also reportedly considering adding Chinese tech giants Alibaba and Tencent to its trading blacklist.
 
According to Xi, the Trump administration is “killing two birds with one stone” by such sanctions against Chinese listed firms, making policies difficult for the next US president Joe Biden, as well as hurting China-US relations further with a hardline approach toward China.
 
“The sanctions against Chinese listed firms would become a ‘hot potato’ for the Biden administration, as Biden would be criticized for his ‘soft’ stance on China issues if he abandons Trump’s order, and would face hardship improving China-US relations if he keeps Trump’s crackdown measures,” Xi said.
 

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