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1 1 (September 21, 2020)

handle is hein.crs/govdbxo0001 and id is 1 raw text is: Cor 101 1 Researh Service U.S. Regulation of Chinese Stocks: Legal Background and Regulatory Options September 21, 2020 Tensions between the United States and China have again moved to center stage. In recent weeks, the Trump Administration has ordered China to close its Houston consulate over allegations of economic espionage, imposed sanctions on Hong Kong officials accused of undermining the region's autonomy, and issued executive orders that may effectively ban the use of two Chinese apps-TikTok and WeChat- in the United States. While commentators once noted the interdependence that characterized the U.S.- China relationship, these developments and similar disputes now generate debate over whether the two powers are on the verge of an economic decoupling. The regulation of U.S. investment in Chinese securities is another fissure in the bilateral relationship that has attracted special attention from Congress, the Trump Administration, and the Securities and Exchange Commission (SEC). In April, SEC officials released a statement warning investors of the risks of emerging-market stocks after two U.S.-listed Chinese firms announced that their employees had fraudulently inflated past sales figures. A month later, the Senate unanimously approved legislation that would prohibit trading in the securities of companies whose auditors deny U.S. regulators access to their work papers-a category that most prominently includes Chinese firms. And in July, the President's Working Group on Financial Markets (PWG) issued a report endorsing several proposals to strengthen protections for American investors in Chinese securities. Stricter regulation of Chinese stocks could have important implications for U.S. investors. Chinese companies listed on U.S. exchanges boasted a combined market capitalization of $1.2 trillion at the end of 2019. American investors have also taken on more exposure to firms listed on Chinese exchanges- perhaps unwittingly-as major index providers have increased the weight of such companies in their emerging-market indexes over the past year. This Legal Sidebar discusses the current regulatory framework governing U.S. investment in Chinese stocks, alleged inadequacies in that framework, and several proposals to strengthen the relevant laws and regulations. Congressional Research Service https://crsreports.congress.gov LSB10538 CF-S LegM Sideba Prepaimed for Mernbei-s and Com mittees o. Co q ess ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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