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The financial decoupling between China and Wall Street is accelerating

Five Chinese public companies announced on Friday, August 12, their withdrawal from the New York Stock Exchange: the oil groups Sinopec and PetroChina, the insurer China Life Insurance, Chalco, which is one of the world leaders in aluminum, as well as a subsidiary of Sinopec based in Shanghai.

In separate press releases, each company explained that this withdrawal ” voluntary “ is motivated by the lack of interest for it to be listed in the United States, by the costs linked to the “bureaucratic burden” imposed by compliance with the rules of the New York Stock Exchange, and by the fact that the Shanghai and Hong Kong Stock Exchanges offer sufficient solutions. The Chinese market regulator, the CSRC, also spoke, minimizing this withdrawal. According to him, this is part of the “normal life of the capital market”.

Transparency requirements

business as usual ? It is permissible to doubt it. The real reason for these withdrawals lies in five letters, which have become the nightmare of red financiers: the HFCAA, the Holding Foreign Companies Accountable Act. This law was passed under the presidency of Donald Trump, but implemented in December 2021 under Joe Biden, which increases the transparency obligations of foreign companies. As it obliges them in particular to reveal the names of the leaders, members of the Communist Party (CCP), Beijing sees it as an anti-Chinese law.

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“How to make public the shareholding of state companies since this is the preserve of the red families? », wonders Isabelle Feng, researcher at the Perelman Center for Philosophy of Law at the Free University of Brussels. According to this specialist, the US Congress is also preparing a law to require companies to comply with the HFCAA law from 2023, and not 2024 as initially planned.

More than two hundred Chinese companies would be listed in the United States

“A voluntary withdrawal from the Stock Exchange is less humiliating than a delisting forced, as experienced in May 2021 by China Telecom, China Unicom and China Mobile, M-grademe feng. But above all, by taking the lead, China now controls “the narrative” on what is happening on Wall Street and sets the tone: pushed out by the Americans, these companies are thus disguised as patriotic heroes who have taken the initiative to leave Wall Street to return to the mother country. »

Far from being explained by purely commercial reasons, as the five firms claim, their withdrawal from Wall Street is the latest symbol of the current decoupling between the American financial markets and China. Sign of the times: Alibaba, which had made the “one” of the world financial press by carrying out on Wall Street in September 2014 the largest IPO in history (25 billion dollars), saw its action plunge at the end of July after the US stock market watchdog, the SEC, revealed that it had added Alibaba to its list of companies not complying with the HFCAA law. A list that includes 159 names, according to Mme Feng.

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