US President Donald Trump instructed the Treasury Department and his White House assistants to develop rules within two months that would tighten requirements for Chinese companies to place and circulate their securities on US exchanges, Reuters reported.
The recommendations will cover the work of the Securities and Exchange Commission (SEC) and the public audit regulator PCAOB. They will be allowed to take a tougher stance towards companies that do not allow their audit to be conducted.
For the United States, this will be a way to punish China, because, as Trump emphasized, for decades, Chinese companies have used the American exchanges and received funds from there.
At the same time, he added, the PRC authorities did not allow companies to fulfill the requirements for the protection of investors, which are mandatory for their competitors from the United States. Thus, Beijing used the concealment of information to its advantage.
Secretary of State Mike Pompeo, commenting on this decision, recalled that the NASDAQ exchange itself tightens requirements for an initial public offering (IPO) amid a scandal with the Chinese company Luckin Coffee Inc.
According to him, actions should become an example for the US stocks and the rest of the world. He also pointed out that Trump has forbidden pension funds that manage the money of civil servants to invest in Chinese securities.
At the moment, stocks of more than 150 Chinese companies with a total value of more than 1.2 trillion US dollars are traded on US exchanges. Trump’s initiatives came amid yet another aggravation of relations between the two largest economies in the world, which led to talk about a possible break in the first stage of the trade agreement.