Why should one get rid of assets in Chinese companies
The trade conflict between the U.S. and China continues to escalate, as evidenced by mutual sanctions and tension in the global market. Bloomberg Agency, citing the U.S. government, said the latter recommends getting rid of assets that are in Chinese companies. This information is linked to concerns about changes in accounting requirements for Chinese businesses that are listed on U.S. stock exchanges.
Experts say that the innovations may lead to the exclusion of a large number of Chinese companies from the trading floors, mass outflow will already be visible by the end of this year. And the statement from the State Department was sent primarily to the financial funds that were created at U.S. universities. For shareholders of companies from China there is another risk – in the case of a new assessment of the financial situation, a number of firms may show different values than they were before, and their securities will fall significantly in price.
The U.S. Treasury Department says that companies from China, which will refuse to conduct an audit and will not follow the new requirements for accounting reports, must withdraw their securities that are on the U.S. stock exchanges. All this must be done by the end of this year.
This situation has caused a negative mood on the part of Chinese business representatives, and Beijing hopes to solve this issue through negotiations with the American party. However, the U.S. is determined and plans to implement the rest of the sanctions, which are aimed at the financial segment.
According to the requirements from the White House, all Chinese companies whose shares are traded at the U.S. stock exchanges are obliged to submit their accounting reports to a special body that controls financial activities.
For companies whose shares are already listed on stock exchanges, there is a deadline for submission of relevant documentation until the beginning of 2022, when the new requirements will come into force. Those firms that are only planning an IPO will have to allow U.S. auditors to assess their financial condition, and on the basis of this report will be decided on the admission to the placement.
In addition to these innovations, Washington has also blacklisted 24 companies from China. The latter are suspected of carrying out bulk works, which were carried out in the South China Sea. Such actions of Beijing have already been condemned by the international community, and the U.S. has responded with sanctions. The fact is that the creation of artificial land plots in the water area is illegal and can be used by China for military purposes.
The companies included in this list will no longer be able to obtain a license from the U.S. government to conduct trade activities in the country.