US Lawmakers Push SEC to Boot Chinese Tech Giants—Alibaba, Tencent in Crosshairs
Washington turns up the heat on Wall Street’s favorite Chinese ADRs. Bipartisan pressure mounts for a financial decoupling—because nothing says ’free market’ like politicians picking winners.
Behind the saber-rattling: A $2 trillion dollar question. Can US markets really afford to cut off China’s cashflow? Spoiler: Hedge funds will find a way—they always do.
The real play? Forcing compliance with audit rules. But with Beijing refusing to blink, investors brace for volatility. Another fine mess brought to you by geopolitical brinkmanship.
Commercial companies from China may support the interests of the Chinese state
Moolenaar and Scott highlighted that even companies that appear to be purely commercial are often involved in supporting the interests of the Chinese state. They cited China’s military-civil fusion policy, which allows the government to compel private companies to share technology with the People’s Liberation Army.
The lawmakers’ call is part of a broader U.S. push to cut off Chinese access to American money, technology, and know-how. It comes amid rising tensions between Washington and Beijing, already deepened by an ongoing trade war.
Just one day before the letter was sent, the CIA released two videos in Chinese aimed at recruiting more intelligence assets inside China — another signal of growing rivalry between the two powers.
In the letter, Moolenaar and Scott said the Chinese Communist Party’s control over companies is “systemically concealed from U.S. investors” and warned that Chinese law creates “unpredictable risk” that cannot be fixed by better disclosures. They also claimed many of the 25 companies mentioned were “actively integrated into the Chinese military and surveillance apparatus.”
They argued that the SEC already has the authority to act under the Holding Foreign Companies Accountable Act, which allows the agency to suspend or revoke the listing of foreign companies that do not meet U.S. auditing standards or fail to protect investors.
“The SEC can — and must — act,” the lawmakers wrote.
Among the firms named were Pony AI, a self-driving technology company, and Hesai, a laser sensor company that the U.S. Department of Defense has linked to China’s military — an allegation Hesai denies.
Others include Tencent Music, a streaming service owned by Tencent Holdings, already blacklisted by the Pentagon, and Daqo New Energy Corp, a solar material producer previously sanctioned by the U.S. Commerce Department over alleged use of forced labor in Xinjiang.
The lawmakers argue that the 25 firms are just a small portion
The lawmakers said the 25 firms represent only a small portion of Chinese companies using U.S. capital while working with “a genocidal dictatorship and our foremost geostrategic rival.”
As of March, there were 286 Chinese companies listed on U.S. exchanges, according to the U.S.-China Economic and Security Review Commission, created by Congress to monitor the economic and national security impact of U.S.-China trade.
The SEC has not yet responded publicly. Chairman Paul Atkins, who took office last month, has not laid out his agenda regarding China. His predecessor, Gary Gensler, had placed greater scrutiny on Chinese companies.
Atkins, during his confirmation hearing, emphasized the importance of transparent accounting and auditing standards for protecting investors.
Meanwhile, the House China Committee has also increased its focus on American financial firms that do business with Chinese companies accused of military ties or human rights violations.
The Chinese embassy in Washington pushed back against the U.S. actions. Spokesperson Liu Pengyu said China opposes the use of national security as a reason to target its companies and criticized what he described as the politicization of trade and technology.
“We oppose turning trade and technological issues into political weapons,” Liu said.
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