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The heads of the two Congressional panels have urged the Securities and Exchange Commission to abolish Chinese groups, including Alibaba, and say they have military links that put US national security at risk.
John Mourenard, Republican Speaker of the House China Committee, and Rick Scott, Republican Speaker of the Senate Committee, wrote to SEC Chairman Paul Atkins on Friday to ask 25 Chinese groups listed on the US exchange to take action.
Targets include search engine Baidu, online retail platform JD.com and popular social media platform Weibo.
“These entities benefit from American investor capital while advancing China’s Communist Party’s strategic goals… supporting military modernization and total human rights abuses.” letterthis was obtained by the Financial Times. “They also pose an unacceptable risk to American investors.”
Moolenaar and Scott said no matter how commercially the Chinese groups appeared on the surface, they were “finally used for the purposes of an evil state,” due to the Chinese military fusion program, which required Chinese companies to share technology with the People’s Liberation Army when Beijing ordered.
This push marks the latest US efforts to counter China and reduce its ability to modernize its military using its American capital, technology and expertise.
The two countries are also caught up in a trade war that exacerbated tensions between Washington and Beijing. On Thursday, the CIA also released two Chinese videos designed to help recruit more spies in China.
Moolenaar and Scott said the degree of CCP control over Chinese companies was “systematically hidden from US investors,” and that Chinese law “submitted an unpredictable risk to US investors that they were unable to strengthen disclosure.” They added that many of the companies cited in their letters are “not simply opaque” but are “actively integrated into the Chinese military and surveillance equipment.”
They said the SEC has the tools and authority under the responsible laws of foreign companies, “force them to suspend and abolish transactions by suspending or cancelling the registration of securities from Chinese companies that do not adequately protect American investors.”
“The SEC can and must act,” wrote Moolenaar and Scott.
Targets include Pony AI, which manufactures autonomous driving technology, and HESAI, the laser sensor group that the Pentagon has listed as a list of suspected military ties.
It also includes Tencent Music, a streaming platform owned by Tencent Holdings, which is already on the Pentagon blacklist. Another group is Daqo New Energy Corp, a polysilicon producer previously blacklisted by the US Department of Commerce for allegedly engaged in forced labor at New Jiang.
The lawmaker said the group is “just a subset of Chinese companies that are accessing US capital while serving the genocide dictatorship and our most important rivals.”
As of March, there were 286 Chinese companies in the US exchange, according to the US-China Economic Security Review Board, which was established by Congress to investigate the security impact of trade and economic relations between the US and China.
The move comes as they are concerned that the US trade war could escalate into a capital war.
“Over the years, underwriters of billions of dollars US investors are gradually approaching, just as they are willing to continue to accept China’s grossly unfair trade practices.”
Atkins, sworn in as an SEC chair last month, has yet to announce policy moves focused on China. His predecessor, Gary Gensler, has stepped up scrutiny of securities related to Beijing.
At the confirmation hearing on ensuring that Chinese groups comply with US standards, Atkins said: “Accounting and auditing are clearly important for investor protection and capital markets.”
In addition to promoting US actions against Chinese companies, House China Panel has stepped up scrutiny of American financial groups working or investing with Chinese companies claiming military relations or facing accusations of human rights abuses.
FT has requested comments from companies.
The Chinese embassy in Washington said Beijing was opposed to the United States. “It uses state equipment and long arm jurisdiction to flaunt the concept of national security and to defeat Chinese companies.”
“We are opposed to turning trade and technology issues into political weapons,” said Li Pengyu, a spokesman for the embassy.
The SEC was approached for comments.
