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The Trump administration will take measures to safeguard Americans from the risks of investing in Chinese companies, US President Donald Trump said in a speech aired by the White House on Friday as he ratcheted up pressure on the firms to comply with US accounting and disclosure rules
Speaking at a White House briefing to unveil measures targeting Beijing over Hong Kong, Trump said he is instructing the presidential working group on financial markets to study "differing practices of Chinese companies listed on US markets with the goal of protecting American investors".
"Investment firms should not be subjecting their clients to the hidden and undue risks associated with financing Chinese companies that do not play by the same rules," he said, adding that Americans are entitled to "fairness and transparencies."
Members of the working group include Treasury Secretary Steven Mnuchin, Federal Reserve Chairman Jerome Powell, Federal Reserve Bank of New York President John Williams, Securities and Exchange Chairman Jay Clayton and other regulatory officials.
The move comes at a time when the US government has started extending its trade and technology battle with Beijing to capital markets, amid souring ties over the origins of the deadly coronavirus.
Earlier this month, an independent board tasked with administering federal worker and military pension funds halted plans to allow one of its funds to track an index that includes controversial Chinese companies, under pressure from the White House.
The US Senate also passed a legislation in May that could prevent some Chinese companies from listing their shares on US exchanges unless they follow standards for US audits and regulations.
Chinese plans to impose a new national security legislation on the former British colony. Secretary of State Mike Pompeo has said the territory no longer warrants special treatment under US law that has enabled it to remain a global financial centre.
Before Covid-19, Chinese direct investment in US dropped to lowest in 2019
On the other hand, China's direct investment in the US last year fell to its lowest level since the Great Recession, even before the coronavirus pandemic shut down much of global commerce.
The decline in Beijing's investment in the US reflected tensions between the world's two biggest economies and Chinese government restrictions on overseas investment.
A report released on Monday by the National Committee on US-China Relations and the Rhodium Group consultancy found that China's direct investment in the US dropped from $5.4 billion in 2018 to $5 billion last year, the lowest level since the recession year of 2009.
Direct investment includes mergers, acquisitions and investments in things like offices and factories but not financial investments like purchase of stocks and bonds. The report found that Chinese direct investment in the US virtually vanished — falling to to $200 million in January-March quarter of this year, as the coronavirus pandemic hammered the world economy.
US investment in China, meanwhile, ticked up last year to $14 billion from $13 billion in 2018. But that increase largely reflected previously announced projects, including Tesla's factory in Shanghai.
Two-way investment between the US and China fell to a seven-year low, the report found. US regulators, worried that China will gain access to sensitive American technology, have been taking a harder look at Chinese investment in the US, a shift mandated by a 2018 law.
