WASHINGTON (Financial Times) -- A leading China hawk in the U.S. Congress has lashed out at Chinese listings in the U.S. in the wake of the botched initial public offering of ride-hailing app Didi Chuxing, as the debacle attracted scrutiny in Washington.
Marco Rubio, a Republican senator from Florida, told the Financial Times in a statement that it was "reckless and irresponsible" to allow Didi, which he described as an "unaccountable Chinese company," to sell shares on the New York Stock Exchange.
He added that Beijing's regulatory crackdown, which triggered a brutal share price decline in the wake of the IPO, "further underscores the risks" for U.S. investors in Chinese companies.
"Even if the stock rebounds, American investors still have no insight into the company's financial strength because the Chinese Communist Party blocks U.S. regulators from reviewing the books," Rubio said. "That puts the investments of American retirees at risk and funnels desperately needed U.S. dollars into Beijing."
Rubio's comments highlighted how the troubled Didi IPO could stoke efforts in Congress to tighten the screws on Chinese listings in the U.S.
Last year, then-President Donald Trump signed legislation imposing tougher accounting standards on Chinese entities that sell shares in the U.S., after a groundswell of support from lawmakers.
The law, in effect, bars companies from listing in the U.S. if they fail to submit to audits from the Washington-based Public Company Accounting Oversight Board for three years.
But China critics in Washington believe the legislation should serve as the starting point for a broader decoupling of capital markets between the countries.
"This fiasco will only strengthen the resolve of many on Capitol Hill and elsewhere to demand greater U.S. investor protection with regard to Chinese companies in our capital markets," said Roger Robinson, a former chair of the U.S.-China Economic and Security Review Commission.
Robinson, who is now chief executive of RWR Advisory Group, a Washington-based consultancy, added that the episode served "as a fresh reminder to Wall Street of the capriciousness of [the Communist Party's] market interventions and the party's total disregard for the cascading downsides."
Washington's focus on Chinese listings in the U.S. was raised after regulators charged Luckin Coffee, the Chinese coffee shop chain, with defrauding investors, forcing the company to pay a $180 million settlement. This year, Luckin filed for bankruptcy protection in the U.S.
But while U.S. regulators took a leading role during the Trump administration in raising alarm bells about Chinese listings in the U.S., the Biden White House has not yet reacted to the botched Didi IPO. The U.S. Treasury Department declined to comment, as did the Securities and Exchange Commission.