Gordon G. Chang is a name you should remember since he’s one of the best commentators on what’s going on in China. Here he is writing at the Gatestone Institute:
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- Why do Chinese companies pillage American investors? Because American rules — more precisely, exceptions to them — essentially invite them to do so.
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- Unfortunately, China is rapidly moving in the wrong direction. In March, it took a big step backward by amending its securities law to further impede the sharing of audit information with overseas regulators.
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- Roger Robinson, former chairman of the U.S.-China Economic and Security Review Commission, told Gatestone that he is also concerned about whether the new rules will be enforced. “Although historic progress is being made vis-à-vis China’s abuse of the U.S. capital markets, there is still a fervent effort underway by Treasury and Wall Street to minimize any disruption to the status quo.”
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- The issue, as Stevenson-Yang notes, is whether American regulators have the “guts” to maintain regulated markets. Chinese companies, many of them with fake books, are betting they do not.
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- China’s issuers, however, are still coming in droves to America. To steal.
Investors dumped the shares of Nasdaq-listed iQiyi late last week after the Chinese company announced that the U.S. Securities and Exchange Commission had initiated an investigation into it for fraud.
In April, short-seller Wolfpack Research accused iQiyi of inflating revenue and user numbers by double-digit margins. The “fraud,” as Wolfpack termed it, dated back before iQiyi’s initial public offering in March 2018.
iQiyi, known as the “Netflix of China,” is no fly-by-night operation. It is owned by blue-chip Baidu, “China’s Google.”
The iQiyi scandal follows a series of Chinese frauds, most notably Luckin Coffee, which admitted fabricating sales and was delisted from Nasdaq at the end of June.
Want someone to blame? Of course, you should be angry at dishonest Chinese company execs, but rapacious Wall Street dealmakers and complicit American regulators deserve the tar and feather too.
Read more: Gatestone
Image credit: www.gatestone.com.
