U.S. lawmakers press the SEC: 25 Chinese companies, including Alibaba and Baidu, should be immediately delisted from U.S. exchanges.

U.S. lawmakers earlier this week sent a letter to the SEC, requesting the delisting of 25 Chinese companies, including Alibaba and Baidu, citing national security and military ties, raising market concerns over a potential wave of delistings and an escalation of the U.S.-China capital battle. (Background: Trump’s first 100 days in office set off alarm bells! Approval ratings below 40%, the worst for a U.S. president in 80 years. Has the tariff war truly made the USA great again?) (Additional context: What’s next for Musk after stepping back from DOGE? Trump pushes OPM to 'emphasize loyalty to the president' and continues to fire federal employees) The policy winds in the U.S. are creating a strong headwind for Chinese companies listed in the U.S. According to a report from the Financial Times yesterday, John Moolenaar, the Republican chairman of the House China Affairs Committee, and Rick Scott, the Republican chairman of the Senate Aging Committee, formally sent a letter to the U.S. Securities and Exchange Commission (SEC) on Friday, targeting 25 Chinese companies, including Alibaba and Baidu, strongly recommending that the SEC delist them from U.S. exchanges. Congressional pressure: Chinese companies face delisting crisis Lawmakers emphasized that while these entities benefit from U.S. investor capital, they advance the strategic goals of the Chinese Communist Party, supporting military modernization and serious human rights violations. They stated that this poses an unacceptable risk to U.S. investors. The lawmakers believe that regardless of how commercial these Chinese companies appear on the surface, they are ultimately being 'used for improper national purposes.' Because Chinese law allows companies to 'systematically conceal' their national affiliations from U.S. investors, this creates 'unpredictable risks for U.S. investors, which enhanced disclosure cannot mitigate.' Many of the companies mentioned have been criticized for being 'opaque' and are believed to be 'actively integrated into Chinese military and surveillance agencies.' For example, the automotive sensor company Hesai has been listed by the Pentagon as a company with suspected ties to the Chinese military. Tencent Holdings, the parent company of Tencent Music, has also been blacklisted for similar reasons. Additionally, Daqo New Energy was placed on the entity list by the U.S. Department of Commerce due to allegations of forced labor issues in Xinjiang. These situations highlight potential national security risks, which could translate into legal and compliance risks faced by investors, ringing alarm bells for global investors. (Foreign Company Accountability Act): Legal weapon for delisting Regarding the legal basis for Congress to pressure the SEC to delist Chinese companies, it primarily comes from the Foreign Company Accountability Act (HFCAA). This act grants the SEC the power to suspend trading and enforce delisting, particularly targeting foreign companies that fail to comply with U.S. auditing standards or adequately disclose their relationships with foreign governments. With the new SEC Chairman Paul Atkins set to be sworn in in April 2025, the market expects that he may accelerate enforcement actions against non-compliant companies or those deemed to have ties to the Chinese military. According to the HFCAA, if a company fails to meet the Public Company Accounting Oversight Board (PCAOB) audit inspection requirements for two consecutive years, the SEC can initiate delisting proceedings. Considering that April 2025 is the deadline for many companies' fiscal year reports, if this act does indeed start to be enforced, it could trigger actual delisting waves in 2026. The market impact and response of forced delisting Potential actions for forced delisting could significantly impact the market. As of March this year, there were 286 Chinese companies listed on U.S. exchanges, with a total market capitalization exceeding $1 trillion. Goldman Sachs has warned that financial decoupling between the U.S. and China could lead to a sell-off in stocks and bonds of up to $2.5 trillion. For retail investors, companies like Alibaba, where retail shareholders hold as much as 40% of the shares, forced delisting could trigger panic selling and lead to liquidity tightening. Former Chairman of the U.S.-China Economic and Security Review Commission Roger Robinson believes that the multi-trillion-dollar underwriting by U.S. investors of major rivals will gradually come to an end. Responses from both the U.S. and China According to reports, in response to the U.S. Congress's pressure, the Chinese government has strongly opposed through its embassy in the U.S. Beijing believes that the U.S. is 'overextending the concept of national security, using state machinery and long-arm jurisdiction to suppress Chinese companies,' and opposes 'turning trade and technology issues into political weapons,' criticizing U.S. actions against Chinese enterprises as unfair and part of efforts to contain China's economic rise. On the other hand, the U.S. Securities and Exchange Commission (SEC) has stated that the new chairman Paul Atkins will directly respond to the letters from lawmakers, but specific policy measures have not yet been announced. This struggle concerning national security interests and global capital flows, using the Foreign Company Accountability Act as a legal weapon, directly targets so-called companies closely linked to the Chinese military and national interests, reflecting the complex interplay of political, national security, economic, and financial regulatory factors. In the future, the SEC's specific actions, potential countermeasures from China, and the overall direction of U.S.-China relations will profoundly influence the course of this storm. Related reports: U.S. senator calls for Trump's impeachment: $TRUMP meme coin 'selling out the White House backdoor' meets impeachment threshold. Trump claims: China won’t lower tariffs without benefits; no more 90-day pause for countries. Will U.S.-China tariff negotiations finalize? Trump: Xi Jinping made an active call; 200 trade agreements have been reached. 'U.S. lawmakers press the SEC: 25 Chinese companies, including Alibaba and Baidu, should be immediately delisted from U.S. exchanges.' This article was first published in BlockTempo (the most influential blockchain news media).