The US House of Representatives unanimously passed The Holding Foreign Companies Accountable Act on Wednesday, just as it passed unanimously in the Senate in May. US President Donald Trump is expected to sign the bill into law.
The bill would give Chinese firms three years to comply with audits by the US Public Accounting Oversight Board, a nonprofit corporation created by 2002 legislation that audits rules and standards created by the US Securities and Exchange Commission (SEC). Failure to do so will result in the entity being booted from US stock exchanges.
Chinese foreign ministry spokesperson Hua Chunying suggested to reporters on Tuesday that the policy is "discriminatory".
“Instead of setting up layers of barriers, we hope the US can provide a fair and non-discriminatory environment for foreign firms to invest and operate in the US,” she said, according to Reuters.
Advocates of the law say it serves to “protect Americans from being swindled” by Chinese companies that “mislead our investors” to “exploit hard-working Americans.”
“It’s asinine that we’re giving Chinese companies the opportunity to exploit hardworking Americans - people who put their retirement and college savings in our exchanges - because we don’t insist on examining their books,” Sen. John Kennedy (R-LA), one of the lawmakers who introduced the bill, said in a May statement.
“For too long, Chinese companies have disregarded US reporting standards, misleading our investors. Publicly listed companies should all be held to the same standards, and this bill makes commonsense changes to level the playing field and give investors the transparency they need to make informed decisions,” Sen. Chris Van Hollen (D-MD), a bill co-sponsor, also said at the time.
Trump employed similar language in an executive order last month that barred Americans from investing in Chinese firms that do business with the the People’s Liberation Army, China’s armed forces.
Claiming that the government of Chinese President Xi Jinping "compels" ostensibly private firms to support its military-industrial complex, including raising capital by selling securities on foreign markets, Trump wrote that “the PRC exploits United States investors to finance the development and modernization of its military.”
The Trump administration has also blacklisted dozens of Chinese firms, especially tech giants like Huawei, preventing Americans from doing business with them.