(Yicai Global) May 25 -- China’s top securities regulator has come out against a US Senate bill passed last week that the watchdog says politicizes regulation.

Certain provisions of the Accountability Act for Foreign Companies the Senate passed on May 20 are leveled against China, rather than stemming from professional considerations of securities regulation, and the CSRC firmly opposes the politicization of securities administration, the watchdog said on its website yesterday.

If enacted into law by the House of Representatives and signed by President Trump, the act will mandate a ban on trading in the US of the securities of foreign issuers that fail to meet the inspection requirements of the Public Company Accounting Oversight Board for three consecutive years.

The proposed legislation also requires listed companies to disclose whether they are owned or controlled by a foreign government.

The bill utterly disregards the lengthy efforts of Chinese and US regulators to enhance audit supervision cooperation, the CSRC said.

China has always highly valued collaborative auditing and supervision of China-US capital markets and assisted PCAOB in a pilot inspection of a Chinese accounting firm in 2017. The country has repeatedly advanced specific proposals for the two to jointly inspect accounting firms with it since 2019. The CSRC looks forward to a positive reply from US regulators and calls on both sides to step up the joint inspection of accountants with equal, amicable consultation and based on international practices in cross-border audit supervision.

The bill, which will harm the interests of both countries, will not only stop foreign firms from listing in the US, but also sap global investors’ confidence in its capital markets and their international status. High-quality listed companies are an important resource for capital market competition in various countries, and the CSRC believes international investors will choose wisely based on their own best interests, it said.

Formed in 2002, the Washington-based PCAOB is a non-profit institution that regulates publicly traded companies’ auditors to lower investor risks.

Editor: Ben Armour