John Moolenaar, the Republican chair of the House China committee, and Rick Scott, the Republican chair of the Senate committee on Aging, are seeking the delisting of Alibaba (BABA) and other Chinese stocks, citing national security concerns. According to the Financial Times, the heads of the two Congressional panels wrote a letter to the U.S. Securities and Exchange Commission (SEC) on Friday, requesting the delisting of 25 Chinese stocks, accusing them of having military links that put the U.S. national security at risk.
The request from the U.S. lawmakers comes amid the escalating trade war between the two countries after the Trump administration slapped China with steep tariffs and the latter announced retaliatory duties.
U.S. Lawmakers Urge Delisting of 25 Chinese Stocks
The two U.S. lawmakers urged SEC chair Paul Atkins to take action against 25 Chinese groups listed on American stock exchanges. Aside from Alibaba, the list includes retail giant JD.com (JD), search engine Baidu (BIDU), electric vehicle maker XPeng (XPEV), and social media platform Weibo (WB).
They argued that these Chinese companies benefit from American investor capital while promoting the strategic objectives of the Chinese government, thereby “supporting military modernisation and gross human rights violations.”
The lawmakers contended that these high-risk companies operate across various sectors but have some common features. For instance, many face U.S. government restrictions, maintain hidden Chinese Communist Party (CCP) control mechanisms, “secretly” support Chinese military applications, or are accused of slave labor, noted the lawmakers.
Importantly, the lawmakers think that the structural problems due to the CCP’s control over these Chinese companies make the listing of their stocks on U.S. exchanges “untenable” and pose an “unacceptable risk” to American investors.
Wall Street’s Ratings on Chinese Stocks
Amid the ongoing U.S.-China trade, Wall Street has a Strong Buy consensus rating on Alibaba and JD.com among the five stocks mentioned above.
