The U.S. Senate passed legislation on Wednesday that could prevent some Chinese companies from listing their shares on U.S. exchanges unless they follow standards for U.S. audits and regulations.
The measure, sponsored by Republican Senator John Kennedy and Democratic Senator Chris Van Hollen, passed by unanimous consent. However, it must pass the House of Representatives and be signed by President Donald Trump to become law.
"The Holding Foreign Companies Accountable Act" bars securities of any company from being listed on any U.S. securities exchange if it has failed to comply with the U.S. Public Company Accounting Oversight Board's audits for three years in a row.
The measure also would require public companies disclose whether they are owned or controlled by a foreign government.
The bill is written to apply to all foreign companies, but it is targeted at China, and follows intense criticism of Beijing by Republican President Donald Trump that has been echoed by Republican and Democratic lawmakers.
Trump and other officials in his administration insist that China mishandled the novel coronavirus during the early weeks of an outbreak that has spread into a global pandemic that has killed more than 320,000 people and cratered global economies.
Beijing denies such allegations.
"There are plenty of markets all over the world open to cheaters, but America can't afford to be one of them. China is on a glidepath to dominance and is cheating at every turn," Kennedy said in a statement.
"For too long, Chinese companies have disregarded U.S. reporting standards, misleading our investors," Van Hollen said.