Abstract

In March 2022, the U.S. Securities and Exchange Commission (SEC) included five Chinese companies in the "pre-delisting list" under the Foreign Company Accountability Act, which has stirred up huge concerns about the risk of delisting Chinese stocks. The negative impact also quickly transmitted into the U.S. and Hong Kong stock markets. Financial disclosure issues related to Chinese stocks are not new. The SEC's recent action marks the beginning of a broader "precision crackdown" on Chinese finance by U.S. and Chinese regulators, who have been debating how to review the accounting filings of Chinese stocks since 2013. The U.S. has stepped up its legal push to "decouple" U.S. and Chinese finance, posing a real threat to Chinese companies who seek to list and raise capital in the United States. The "gray rhinoceros" of the Russia-Ukraine war and the complex geopolitical tension among China, the U.S., and Russia are increasing the risk of the U.S.-China financial decoupling.