The statement applies to the many Chinese companies that have been targeted by short-sellers who found them to be frauds and targeted them in activist campaigns to reveal their unethical business practices. Some examples of Chinese companies that have been targeted by short-sellers with fraud allegations include Luckin Coffee, China Metal Resources, Kandi Technologies Group, and Nano-X Imaging. One of the reasons there are so many questions about the financials of Chinese companies is because they don’t comply with audit requirements.
What the bill means for investors and companies
While the bill that could delist many Chinese companies is designed to protect U.S. investors, it comes up short of this and doesn’t really restrict potentially fraudulent companies’ access to capital. The Wall Street Journal notes that such companies could simply rely more heavily on Hong Kong investors through the Hong Kong Stock Connect Channels. The Journal argues that there’s little indication that such companies would be damaged or restrained if they had to rely on investors in Hong Kong more.
