Few expect Chinese businesses to abandon the U.S. as a listing venue after the U.S. Senate escalated tensions with China by overwhelmingly approving a measure that could lead to the barring of Chinese companies from American stock exchanges.
Relations between the world’s two largest economies have deteriorated markedly in the past few months. Tensions spilled over into Chinese companies’ access to U.S. capital markets following the collapse of Luckin Coffee Inc. shares, one of China’s brightest startups, as a result of accounting fraud.
The Senate bill passed Wednesday would require companies to certify that they are not under the control of a foreign government or submit to audits from a U.S. accounting agency to determine that. China’s refusal to let the Public Company Accounting Oversight Board examine audits of enterprises whose shares trade on American exchanges has long been a bone of contention.