GT Voice: US move won’t deter Chinese firms from competing in global security markets
Published: May 05, 2022 11:12 PM
Pedestrians wearing face masks walk past the New York Stock Exchange in New York, the US. Photo: Xinhua

Pedestrians wearing face masks walk past the New York Stock Exchange in New York, the US. Photo: Xinhua

The US Securities and Exchange Commission (SEC) on Wednesday added more US-listed Chinese companies, including, Pinduoduo Inc and Bilibili Inc, to its list of entities that face possible expulsion from American exchanges under The Holding Foreign Companies Accountable Act.

Since the act, which aims to remove foreign companies from US exchanges if they fail to provide audits for inspection for three years in a row, clearly targets Chinese companies listed in the US, the SEC's latest move could easily be interpreted as a continued US crackdown on Chinese companies. So far, the SEC has added 105 US-listed Chinese companies to the so-called provisional list for possible delisting. 

The development also raises concerns over the prospects of auditing cooperation talks that have been reportedly ongoing between Chinese and US securities regulators. It is not long ago that Fang Xinghai, vice chairman of the China Securities Regulatory Commission (CSRC), said at the Boao Forum for Asia annual conference 2022 that "The bilateral negotiations are going very smoothly and we are confident that the relevant uncertainties regarding US-listed Chinese firms will soon be removed."

Whether those Chinese companies will be delisted from US markets still depends on the progress and result of bilateral cooperation on audit supervision. And we sincerely hope that despite political headwinds, regulators of the two countries could deepen their cooperation in the financial field to prevent any mutually destructive outcome from happening.

Over the past few years, due to the extreme anti-China political sentiment, the US has launched various geopolitical containment and trade suppression measures against China. The situation has greatly affected the foundation and atmosphere of financial cooperation between the two countries, with voices calling for a clampdown on fundraising by Chinese companies in the US. It should be noted, however, that such clamoring for a financial decoupling is ill-intentioned and will only hurt interests of both sides.

For a long time, China has taken a relatively cautious attitude when it comes to dealing with the US supervision measures targeting Chinese companies listed in the US. This is because past experience already showed that a US listing is beneficial for Chinese companies, benefiting the Chinese economy in the long run.

Meanwhile, the fundraising of Chinese companies in the US is also beneficial to US financial markets. China has been one of the world's fastest growing economies over the past decades, so the overseas listing of Chinese companies means opportunities to share China's development dividends, which is an irresistible attraction for global investors.

In 2021, Chinese companies raised $14.167 billion through 40 IPOs in the US, up from $12.26 billion in 2020 and $3.44 billion in 2019. Despite the pending audit dispute and the delisting legislation, the successful market floats are evident enough as to how US markets welcome listings of Chinese companies there.

Of course, it is undeniable that the US is taking a conflicting mindset toward US-listed Chinese companies due to worries that Chinese companies are taking advantage of US stock market. That's why the US has showed the intention of gradually curbing the growth of Chinese companies by restricting their fundraising. 

But the US attitude should not be a roadblock deterring Chinese businesses from the US market. Instead, it is necessary for China to be more active in promoting overseas listings of Chinese companies so as to participate more in the competition in the global securities market. During the process, China also needs to continuously facilitate the development of the mainland and Hong Kong stock markets.

In this sense, when it comes to overseas listing of Chinese companies, what China needs to do now is to keep calm while rationally promoting the coordination of audit supervision with US regulators.