Congress is moving rapidly to pass a bill aimed at delisting Chinese stocks on U.S. markets. “The Holding Foreign Companies Accountable Act cleared the Senate via unanimous consent,” writes Thomas Franck of CNBC, signaling “both the widespread mistrust of China on Capitol Hill as well as the likelihood of its becoming law before long.”
As Franck notes in the CNBC article, the House of Representatives appears unlikely to resist the bill, which captures popular sentiment in the U.S. toward China.
“The forced delisting would strip affected companies of billions in market value and cause a great deal of reputational damage too,” writes Eamon Barrett of Fortune.
From my perspective as a technology leader, I foresee a range of unintended consequences from the move to delist Chinese companies. On one hand, it may force some Chinese companies to become more transparent about their use of cutting-edge technologies such as AI, computer vision and customer sentiment analysis. On the other hand, it might push Chinese tech firms to become more secretive and less willing to share new technologies with the rest of the world. And of course, there might be direct retaliatory steps from the Chinese government.
It’s impossible to say with certainty where this will lead, but it feels as though a major shift is occurring. When shift like this occur, technology leaders and executives need to pay close attention. I am cautiously optimistic that the bill, if it becomes law, would have an upside. Here’s an interesting perspective from MarketWatch:
“A U.S. threat to delist Chinese firms could be worth the risk, leading not only to more credible disclosures, but also, perhaps surprisingly, to more listings by high-quality Chinese private-sector firms,” writes Shang-Jin Wei of MarketWatch. “Truthful disclosure and severe punishment for noncompliance constitute the bedrock of sound capital-market governance.”
As technology leaders, these are the kinds of changes we should be watching carefully. At minimum, we need to start planning for a future in which China plays a substantially reduced role in parts of the U.S. economy.
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