U.S. Senate Passes Anti-China Legislation To Remove China from U.S. Stock Exchanges, Decouple from China
May 22, 2020 (EIRNS)—On May 20, the U.S. Senate passed the anti-China Holding Foreign Countries Accountable Act (HFCA), with unanimous bipartisan support. Combined with other actions, this appears to be a British attempt to force the United States to decouple financially and economically from China—an extremely dangerous path.
The bill’s sponsors are two anti-China fanatics, Senators John Kennedy (R-La.) and Marco Rubio (R-Fla.), and Senator Chris Van Hollen (D-Md.), who is a leader of Senate Democrats. On the same day, an identical version of the bill was introduced into the House of Representatives by Rep. Brad Sherman (D-Calif.), and could pass within the next few days, then going to President Trump for signature.
The HFCA calls for “delisting” Chinese companies—removing them from the New York and other U.S. stock exchanges—making it impossible for Chinese companies to raise new capital, through stock offerings, in the United States, or even to be traded on U.S. stock exchanges, as they have done up to now. Here’s how:
The U.S. Public Company Accounting Oversight Board (PCAOB) and the Securities and Exchange Commission (SEC) require the audit of foreign companies if they are to be listed/traded on the New York and other American stock exchanges. The U.S. agencies instructed the Chinese companies to be audited by accounting firms which are “acceptable” to the U.S. agencies. The Chinese have not done that, and take the view they don’t want to open their books to such U.S. accounting firms as Deloitte & Touche, or the Wall Street-City of London-influenced PCAOB and SEC, which could conduct inappropriate probes and turn the information over to British-American intelligence. The Chinese companies are audited by their own auditing system, which does a competent job.
The Holding Foreign Countries Accountable Act demands that companies issue audit reports, “prepared by registered public accounting firms,” and overseen by the PCAOB. Failure to do so for three years is now grounds for being delisted from the New York Stock Exchange. The bill also requires companies to disclose foreign ownership or control.
In 2018, some 58% of money raised by foreign firms through stock offerings in the United States was by Chinese companies. The Chinese have companies with stocks valued at about $1.8 billion traded on the U.S. stock exchanges. The intent is to cut that off entirely.
The above is part one of a two-part attack strategy. Here is part two:
In the 1990s, the U.S. passed a law that supposedly gives U.S. approval for a special status for Hong Kong banks and financial institutions, allowing them to lend and borrow in dollars. Subsequently, the Chinese government and Chinese companies have used Hong Kong financial institutions to borrow a significant volume of dollar credits for Chinese operations. The United States is now claiming it has the ability and right to shut down a large part of Chinese borrowing through Hong Kong. In November 2019, the U.S. Congress passed, and President Donald Trump signed into law, the provocative Hong Kong Human Rights and Democracy Act. Under it, the U.S. Secretary of State can impose sanctions on China, and is “given the authority” to find whether China is violating the “autonomy” of Hong Kong. If Pompeo (or his successor) so finds, then the U.S. can supposedly revoke the special privilege granted to Hong Kong banks, and, by its reasoning, China could not borrow heavily through the Hong Kong banks. The aim: To shut China out of the world credit markets. Even such an attempt could lead to a rupture.
Through these two actions, the City of London and Wall Street believe they can get a flight-forward U.S. to decouple, financially and economically, from China.
Of course, this action, based on such an irrational premise, may not work out the way the British think. But it will corrode U.S.-China relations, and likely lead to war.