COVID-19

Senate passes bill that could ban some Chinese companies from U.S. stock exchanges

David Brancaccio, Nova Safo, and Alex Schroeder May 21, 2020
Heard on: Marketplace Morning Report
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Brendan Smialowski/AFP via Getty Images
COVID-19

Senate passes bill that could ban some Chinese companies from U.S. stock exchanges

David Brancaccio, Nova Safo, and Alex Schroeder May 21, 2020
Brendan Smialowski/AFP via Getty Images
Share Now on:
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The Senate has unanimously passed a bill that could force some foreign companies off American stock exchanges. Any foreign company could be affected, but senators were thinking a lot about China.

It’s bipartisan legislation written by Sen. John Kennedy, R-La., and Sen. Chris Van Hollen, D-Md. They say China is cheating and misleading American investors.

The idea behind the bill is to compel all foreign companies to allow American regulators access to their books, to ensure their accounting is honest and sincere. This is the same standard American companies must meet to be listed on stock exchanges.

The problem is that there are more than 200 foreign firms which are not meeting that standard. Many are Chinese. And they have a combined market capitalization of nearly $2 trillion.

Their stocks are traded, but American investors don’t have a full picture of what’s going on inside those companies.

If the bill passes the House and is signed into law, whether or not we see 200 companies immediately delisted depends on how companies cooperate.

There’s a three-year provision in the bill, so if American regulators haven’t had access to a company’s records for three consecutive years, then the Securities and Exchange Commission can prohibit trading of that company’s shares.

Shas Das, who between 2011 and 2015 was the chief U.S. negotiator with Chinese regulators, told Marketplace Thursday morning that he doesn’t know “that the Chinese companies would effectively capitulate.”

“And I say that because they have other jurisdictions that would be more than happy to be venues for their listing,” Das said.

He says Hong Kong’s stock exchange is one likely destination for these companies, rather than more transparency with U.S. regulators.

The bill also requires firms to disclose if they’re owned or controlled by a foreign government. This has long been a big issue for American leaders — to what extent Chinese firms answer to that country’s government.

COVID-19 Economy FAQs

When does the expanded COVID-19 unemployment insurance run out?

The CARES Act, passed by Congress and signed by President Donald Trump in March, authorized extra unemployment payments, increasing the amount of money, and broadening who qualifies. The increased unemployment benefits have an expiration date — an extra $600 per week the act authorized ends on July 31.

Which states are reopening?

Many states have started to relax the restrictions put in place in order to slow the spread of COVID-19. Although social-distancing measures still hold virtually everywhere in the country, more than half of states have started to phase out stay-at-home orders and phase in business reopenings. Others, like New York, are on slower timelines.

Is it worth applying for a job right now?

It never hurts to look, but as unemployment reaches levels last seen during the Great Depression and most available jobs are in places that carry risks like the supermarket or warehouses, it isn’t a bad idea to sit tight either, if you can.

You can find answers to more questions here.

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