Now, in what comes as a punitive measure, the US Senate has passed legislation that could ban Chinese companies from listing shares on American exchanges. The list includes companies like Alibaba Group Holding Ltd. and Baidu Inc.
A recent scandal involving Luckin Coffee, China's version of Starbucks, which fabricated millions worth of sales previous year, provided U.S. legislators with the impetus to tighten regulation of foreign companies listing in the United States which, although it doesn't specifically say so, is targeting Chinese firms.
"Publicly listed companies should all be held to the same standards, and this bill makes common sense changes to level the playing field and give investors the transparency they need to make informed decisions", Bloomberg reported Van Hollen as saying. Alarms had also been growing that American money is bankrolling efforts for China to develop artificial intelligence and autonomous driving to internet data collection to be the leading nation in technological developments.
The scandal-hit firm has said that it has been co-operating with regulators in the U.S. and China, who have begun an investigation into the company.
"We can't let foreign threats to Americans' retirement funds take root in our exchanges", said Senator John Kennedy who introduced the bill in the Senate.
"All Chinese US-listed entities are potentially impacted over the coming years", he said.
Last Friday, Nasdaq filed a delisting notice against Luckin, while the exchange simultaneously seeks to tighten its rules on IPO eligibility purportedly to make it harder for Chinese companies to list.
Though the law could be applied to any foreign company, lawmakers say it is aimed at strengthening disclosure requirements on Chinese firms. The US' Trump administration, having ignited a trade war with its economic rival back in May past year when it banned Chinese telecommunications company, Huawei from using US products and technology in its devices.
The Bill is also part of a steady stream of legislation against China on issues ranging from trade to human rights in Tibet and Xinjiang, a bipartisan push from Congress that dovetails with the President's recent belligerent statements on China. "This legislation protects the interest of hardworking American investors by ensuring that foreign companies traded in America are subject to the same independent audit requirements that apply to American companies", the USA government said. The White House, however, dismissed the reports as untrue.
"The Chinese Communist Party cheats, and the Holding Foreign Companies Accountable Act would stop them from cheating on the U.S. stock exchanges". Still, he said that cracking down could backfire and simply result in the firms moving to exchanges in London or Hong Kong.