U.S. regulators have accelerated enforcement of a law that could shut down Chinese companies whose accounts are not visible. The addition of Weibo, China’s equivalent of Twitter, to the SEC’s delisting list could mean other Chinese internet giants such as Alibaba and Baidu are not shying away from similar pressure.
In 2020, the Trump administration passed a bill aimed at tightening accounting standards for foreign companies. The law, which requires the books of U.S.-registered foreign companies, such as China, to be examined, does not fear transferring data to certain countries, which could jeopardize their national security.
China was one of the few countries that did not fully cooperate with the SEC’s Public Company Accounting Oversight Board, which was created to oversee foreign companies trading US stocks. But reluctance is waning as China recently asked some of its biggest US tech favorites, including Alibaba, JD and Baidu, to prepare additional audit details, Reuters reported this week.
However, according to the report, these audit documents will not contain confidential data.
Several U.S.-listed Chinese tech organizations have already held secondary listings in Hong Kong amid rising tensions between the two superpowers. But Beijing’s latest gesture indicates that the country is willing to make concessions to keep its companies invested in US markets, which are preferred over many growth-focused internet companies.