Dec. 3 (UPI) -- Federal lawmakers have approved a punitive measure to delist Chinese companies from U.S. stock markets if they deny government regulators access to vital audits.
The House on Wednesday passed the Holding Foreign Companies Accountable Act, which is aimed at hundreds of listed companies, mostly Chinese, whose audits have not been made available for inspection by the Public Company Accounting Oversight Board.
The same measure, first introduced last year, unanimously passed the Senate in May and now requires President Donald Trump's approval. Trump is expected the sign the law.
The bill would affect more than 200 companies that trade on U.S. exchanges and have a combined value of $1.8 trillion in market capitalization.
Officials say in most cases Chinese accounting firms cite local laws related to data protection, privacy, confidentiality or national security when they don't provide the PCAOB with requested information.
Under the new proposal, foreign companies that don't make the audits available for three consecutive years will be de-listed from U.S. exchanges. It also requires foreign issuers to disclose whether a company is owned or controlled by a foreign government.
"This may be the most significant piece of investor protection legislation passed in several years," said Rep. Brad Sherman, D-Calif., chairman of a House subcommittee on investor protection and capital markets.
The law's purpose, he added, "is not to de-list any company, but to persuade China to allow the audit oversight that U.S. investors need, and the U.S. investors get when investing in U.S. companies or companies in over 50 foreign jurisdictions."
China "has continuously sought to undermine and skirt rules to the detriment of American businesses and national security," added Rep. Anthony Gonzalez, R-Ohio. "In the case of their refusal to participate in PCAOB inspections, this situation is unfair and dangerous for investors."
Chinese foreign ministry spokeswoman Hua Chunying on Thursday called the House's approval "another concrete example of [U.S.] political suppression of Chinese companies in a bid to contain China's development."
Hua said Beijing firmly rejects "politicizing securities regulation" and predicted that if Trump signs the law "it will seriously erode the confidence of global investors in the U.S. capital market."