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End The Sweetheart Deal Joe Biden Gave The Chinese Communists

The patriots at the Committee on the Present Danger: China recently led the successful effort to stop Blackrock’s Larry Fink from investing billions of dollars of America’s federal and military retirement funds in Chinese Communist enterprises.

Now they have brought an outrageous Obama-era policy failure to our attention.

Since May 2013, the U.S. government has allowed the Chinese Communist Party (CCP) and its companies to enjoy preferential treatment in our capital markets. As a result, our stock and bond exchanges have been underwriting a regime whose hostility towards us and determination to dominate the world represent what Ronald Reagan would call an “existential threat to freedom.”

And as Frank Gaffney, Vice Chair of the Committee on the Present Danger: China pointed out in a recent letter, included among those Chinese companies are ones that have been sanctioned by our country, help the CCP oppress its own people and build weapons designed to attack us. And all of these companies withhold information American investors need to be protected against fraud and undisclosed material risks.

Who was responsible for this debacle? Then-Vice President Joe Biden, transcripts from the Obama administration’s archives summarized below show. As’s John Solomon documented:

Since 2013, Chinese companies have been allowed to participate in U.S. stock and bond exchanges without having to fully comply with the same Sarbanes-Oxley Act accounting practices and risk disclosure required of American companies.

The concession was made in a little-noticed Memorandum of Understanding executed seven years ago by the Public Company Accounting Oversight Board (PCAOB), a nonprofit regulator empowered by the Sarbanes-Oxley law to ensure U.S. investors are protected from making bad investments because of faulty audits or financial information.

The agreement was reached in May 2013 after Chinese leaders pleaded for improved access to American capital markets in multiple meetings with then-Vice President Joe Biden, transcripts from the Obama administration’s archives show.

The Committee on the Present Danger: China (CPDC) has raised concerns for over a year about the strategic risks to the nation and its investors arising from the CCP’s penetration of our capital markets. Thanks to a series of Threat Briefings on the subject (for example, here, here, here, here and here) featuring remarks by Roger W. Robinson, the Senior Director for International Economic Policy on President Reagan’s National Security Council and a top architect of his highly successful economic warfare strategy against the Soviet Union, the CPDC has established the need for urgent corrective action.

The Solomon article quotes Robinson as observing: “The fact that Chinese companies are not required to comply with federal securities laws and SEC regulations on material risk disclosure means that they are actually receiving preferential treatment over their American corporate counterparts in our capital markets.”

Robinson went on to challenge the false narrative that enforcing our laws, accounting standards and regulations vis a vis Chinese registrants in our stock and bond exchanges will simply result in those companies going elsewhere, for example to London or Hong Kong. “For those worried that forcing such compliance would cause China to simply move its companies’ listings and equity and debt offerings elsewhere, U.S. global financial dominance is such that, to a large extent, there is no ‘elsewhere’ given China’s huge annual fundraising requirements.” (Emphasis added.)

The Committee on the Present Danger: China facilitated an open letter sent to capital market regulators on Sunday by fifty-one former senior U.S. government officials, influential financial sector figures, China experts, religious leaders and other patriots. The open letter specifically advised Jay Clayton, the chairman of the Securities and Exchange Commission, and William Duhnke, the chairman of the Public Company Accounting Oversight Board: “We believe that the PCAOB must immediately give the required notice to cancel the bilateral Memorandum of Understanding signed on May 7, 2013 by the PCAOB and the China Security Regulatory Commission. This MOU is cancellable at any time for any reason with 30-days notice.”

Although this disaster began during the Obama – Biden administration, the fix has received bipartisan support. Bipartisan legislation, the “Holding Foreign Companies Accountable Act” (S.945), sponsored by Republican Senator John Kennedy of Louisiana and Democrat Chris Van Hollen of Maryland, would impel action to terminate an arrangement that disserves American investors and jeopardizes the nation’s security and its human rights priorities.

We agree with the conservative leaders who signed the Committee on the Present Danger: China letter to financial regulators: “It is up to you …to enforce these requirements and genuinely protect American investors, as well as our national security and fundamental values, by ensuring that the risks associated with investing in Chinese Communist Party-tied securities registered with the SEC and listed on U.S. capital markets are as transparent and disclosed as are those of the registered securities of American corporations. If Chinese corporations are allowed to be registered in our capital markets, they must play by our rules.”

You can lend your name and support to this effort by signing the Committee on the Present Danger: China petition. You may also learn more about this crucial issue and send an email to President Trump and your members of Congress by visiting the Committee on the Present Danger: China website.

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