In another huge blow to China before he leaves White House next month, the outgoing US President Donald Trump last night signed into law the Holding Foreign Companies Accountable Act which would "protect" United States investors from significant risks from Chinese companies.
The Holding Foreign Companies Accountable Act essentially means that certain issuers of securities are required to establish that they are not owned or controlled by a foreign government, specifically if the Public Company Accounting Oversight Board is unable to audit specified reports because the issuer has retained a foreign public accounting firm that is not subject to inspection by the Board.
This essentially means that the Chinese companies which do ot adhere to American auditing standards would be booted out of US stock exchanges.
"The Chinese Communist Party’s malign activity at home and abroad harms US interests and undermines the sovereignty of our allies and partners. The United States will use all countermeasures available, including actions to prevent People’s Republic of China (PRC) companies and institutions from exploiting US goods and technologies for malign purposes. Today’s actions mark yet another sign of our resolve," said Mike Pompeo, the US Secretary of State in a statement.
"The United States is imposing new restrictions on certain entities for activities that undermine our national security and foreign policy interests. Specifically, the Department of Commerce is adding 59 PRC entities to its export-control Entity List," he added.
Pompeo said that the US is adding four entities to the Entity List for enabling human rights abuses within China by providing DNA-testing materials or high-technology surveillance equipment to the PRC government.
"We urge the Chinese Communist Party to respect the human rights of the people of China, including Tibetan Buddhists, Christians, Falun Gong members, Uyghur Muslims, and members of other ethnic and religious minority groups," he said.
Pompeo revealed that additionally, the US Department of Commerce is adding 19 entities to the Entity List for systematically coordinating and committing more than a dozen instances of theft of trade secrets from US corporations to advance the PRC defense industrial complex; engaging in activities that undermine US efforts to counter illicit trafficking in nuclear and other radioactive materials; or using US exports to support the PLA and PRC defense industrial base, whose ultimate goal is to surpass the capabilities of other countries they view as competitors, particularly the United States.
He said that these new restrictions also impose costs on Beijing’s unlawful campaign of coercion in the South China Sea.
"The Department of Commerce is adding 25 shipbuilding research institutes affiliated with the China State Shipbuilding Corporation to the Entity List, as well as six other entities that provide research, development, and manufacturing support for the People’s Liberation Army Navy or attempted to acquire US-origin items in support of PLA programs. Commerce is also adding five PRC state-owned enterprises, including the China Communications Construction Company, for their role in coercion of South China Sea claimant states.".
