Article by Peter Skurkiss in "The American Thinker":
Right now, regulations call for companies listed on U.S. stock exchanges to let the Public Company Accounting Oversight Board (PCAOB) oversee the auditing of their financial records if they want to raise money by selling stocks and bonds to the American public. This is a sound regulation rooted in investor-protection. All U.S. companies work with the PCAOB, but the Chinese ones don't.
The PCAOB and Securities and Exchange Commission (SEC) have for years tried to get China to comply with the regulation but with no success. Regulators have the power to kick the Chinese companies off the exchange but have been reluctant to use the "nuclear option" of delisting.
This impasse is about to be broken. This past Wednesday, the U.S. Senate unanimously passed a bill forcing Chinese companies to comply with the auditing regulation or be de-listed. The bill is called the Holding Foreign Companies Accountability Act.
After passage by the Senate, the bill goes to the Democratic-run House. There, Market Watch reports that momentum is building a favorable vote. All that would be left, then, is for President Trump to sign the bill into law.
Chinese companies such as Alibaba Group Holdings and Baidu have raised billions of dollars from U.S. investors. And since 1996, Chinese companies have raised $66 billion through initial public offerings. There is no earthly reason why American capital should be financing Chinese companies, especially when Chinese firms grant themselves a degree of opaqueness that hurts investors. According to the Wall Street Journal, "Luckin coffee Inc. is the latest example of a hot Chinese stock that gained a following with American investors before fraud was discovered. Nasdaq has moved to delist Luckin. which went public in 2019 and later said its employees fabricated as much as $310 million in sales."
This matter of regulators being unwilling to force China to play by the rules in American exchanges is a microcosm of the absolutely poor leadership the U.S. has had regarding China in the past 25 years. Everywhere you look, our past presidents and virtually the entire political class have allowed China to lie, cheat, and steal with immunity. In other cases, our illustrious leadership has tilted the playing field to China's advantage, for example by allowing the World Trade Organization (WTO) to classify China a "developing nation," thus granting it certain trade advantages. It's little wonder China has grown so powerful so fast.
In 1958, Eugene Burdick and William Lederer wrote The Ugly American. This political novel depicted the failures of the U.S. diplomatic corps in Southeast Asia at the time. The book that needs to be written now is The Stupid Americans for allowing — yes, allowing — China to eat our lunch and hollow out our middle class.