Lawmakers in the U.S. call upon the Securities and Exchange Commission (SEC) to remove Alibaba and other Chinese firms from American stock exchanges, according to Financial Times' reporting.
Rewritten Article:
Two bigwigs from Congressional panels have penned a letter to the Securities and Exchange Commission (SEC), pushing for the removal of Chinese companies that they allege have strong military connections that potentially jeopardize US national security. This news was made public by the Financial Times recently.
As we stand in May 2025, the US is beefing up its game to expel Chinese companies with military links and security concerns, primarily through regulatory actions and political pressure. Here's a lowdown on the key events that have taken place:
The Lay of the Land:
- The New SEC Chief, Paul Atkins, who took charge in April 2025, is believed to expedite the delisting process. Given his appointment, approximately 280 Chinese firms (valued at around $880 billion) listed in the US face potential risks, particularly those that ignore US General Accounting Principles (GAAP) or are connected to China’s military-industrial complex.
- Legislative Push: Republican lawmakers haven't shied away from suggesting the SEC to ditch firms like Alibaba, due to their ties with China’s military modernization and human rights violations. In May 2025, a congressional letter highlighted these companies are "inseparable from China’s military-industrial system" and circumvent US disclosure laws.
- Tools in the Toolbox:
- 2020 Law: The Holding Foreign Companies Accountable Act is ready to enforce delisting if a company fails to comply with audit inspections for two consecutive years. However, its implementation is moving at a snail's pace.
- Executive Orders: Analysts guess President Trump might bypass Congress through national security-focused executive orders to hasten removals.
Motivations for Delisting:
- National Security: Legislators fear these commercial entities could be utilized for surveillance, repression, or military combat, posing a direct threat to US security.
- Fairness in the Market: US corporations grapple with stricter GAAP accounting rules compared to Chinese firms, resulting in an unlevel playing field.
- ** Transparency Issues**: Chinese firms often employ "variable interest entities" (VIEs) which mask ownership and put investors at risk of regulatory problems.
Hurdles and Forecast:
- Workarounds: Some Chinese firms have gotten around these measures in the past.
- Biden-Influenced Delays: Progress in delisting has been held back under previous policies, but the SEC, now with a pro-enforcement stance, is poised to take action, with delistings most likely happening towards the end of 2025 or 2026.
- The securities of Chinese companies linked to the military are under scrutiny, as two congressional panel heads have urged the Securities and Exchange Commission (SEC) to remove them due to potential threats to US national security.
- On Friday, the financial news outlet Financial Times reported that around 280 Chinese firms listed in the US, valued at approximately $880 billion, could face risks due to the new SEC chief, Paul Atkins, who is believed to expedite the delisting process.
- The business and political world are closely watching the developments, as the US is focusing on removing Chinese companies with military links and security concerns through regulatory actions and political pressure.
- In the realm of general news, these events highlight growing tensions between the two nations, with concerns over national security, fairness in the market, and transparency playing significant roles in the congressional push for delisting Chinese securities.
