Late last week, five Chinese state-owned firms, including the country’s leading energy and chemical company, announced plans to delist from the New York Stock Exchange. The five cited “low turnover in the U.S.” and “high administrative burden and costs” for their departures. However, some analysts believe that there are still other hidden reasons for their decisions.
The Financial Times, citing different sources, reported that China is preparing a three-tier data strategy to help some U.S.-listed Chinese companies meet required auditing standards. The companies would be classified into three different groups based on the sensitivity of the data they hold—nonsensitive data, sensitive data, and others with “secretive” data.
According to the report, the Chinese Communist Party plans to let only nonsensitive or “low-risk” data firms provide audit records to U.S. regulators. Meanwhile, companies with sensitive data would restructure their operations to become more compliant, but those in the “secretive data” category must be delisted.
Hu Xijin 胡锡进, the former editor-in-chief of state media outlet Global Times, said that on August 12 that the five Chinese state-owned enterprises are all strategic enterprises in the country. Therefore, they cannot fully report internal audits to the United States.
Li Hengqing 李恒庆, a very experienced auditor from the U.S., told Radio Free Asia that large U.S.-listed Chinese state-owned firms more likely belong to the so-called “secretive data” group. These firms do not have anything to do with national security but will pose real threats for the CCP when their equity information gets exposed.
Li 李 further explained that once the U.S. securities regulator has access to this information, it will find out a list of people from more than 100 CCP members’ families.
He claimed that in China, family members of top CCP leaders always hold essential roles in state-owned firms, so it is also possible for them to own shares in these U.S.-listed Chinese state-backed firms. This secret is something that the CCP never want the outside world to know.
These Chinese families already have the know-how of the U.S stock market. Thus, those state-owned firms never really want “voluntary delisting” as stated in their recent announcement, but must leave due to U.S. regulation.
In addition, Xie Tian 谢田, chair professor in Business the University of South Carolina-Aiken, told Vision Times that the data would reveal all owners and shareholders behind these state-owned companies. Everyone would know how the CCP manipulates China’s economy and makes money from its people. As a result, the Chinese state-owned firms have no choice but to return to Hong Kong or China.
The professor also pointed out another reason that these state-owned firms apply for delistings was due to the communist regime’s fear of international sanctions.
Xie 谢 said that China still has a large amount of gold reserves, U.S. Treasury bonds, and the funds of these state-owned firms in the United States. The U.S. would likely impose sanctions on these companies if the CCP decides to attack Taiwan, so they better leave in advance.
Reuters, citing people familiar with the matter, noted that the SEC still has the authority to require firms to file audited financial statements, even if they are delisted from the U.S. stock market. Therefore, these five Chinese state-owned companies might be unable to avoid handing over their confidential data to the SEC as the CCP wishes, despite having announced their delisting.