US stabs itself in back; China complains
Will forcing all foreign firms to comply with US audit standards be the straw that breaks the camel’s back in Beijing?
A bill passed by the United States Senate that aims to force all foreign firms to comply with US audit standards has received short shrift in Beijing.
China’s securities regulator – the CSRC – hit back, saying the proposal will “weaken confidence” in US stocks, and accusing lawmakers in Washington of “politicis[ing] securities regulation” and creating a law “directly targeted at China”.
Two of those charges are true; the third may be, too. The bill is certainly conveniently timed from a US point of view. Donald Trump has been bashing China for months, his fears of losing re-election due to the Covid-19 pandemic, which started life in the mainland city of Wuhan, clear for all to see.
But in recent weeks, he has banged the rhetoric up a notch. In mid May, he ordered the main government pension fund, the Federal Retirement Thrift Investment Board, not to invest any of its $600 billion portfolio in Chinese securities.
Sino-American relations are further assailed by threats to reignite a trade war, renewed unrest in Hong Kong, and Washington’s decision to tighten sanctions on technology firm Huawei.
In an attempt to justify the bill, US officials can point to the case of Beijing-based Luckin Coffee, a Nasdaq-listed coffee chain whose shares collapsed after it admitted to fabricating more than $310 million in sales.