Potential congressionsal action against Chinese companies utilizing US capital markets that pose a national security threat to the US. The list includes Hesai which is the current world leader in LiDAR sensor sales.
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<<The Honorable Paul Atkins
Chairman
U.S. Securities and Exchange Commission 100 F Street NE
Washington, D.C. 20549
Dear Chairman Atkins,
As Chairmen of the House Select Committee on the Strategic Competition Between the United States and the Chinese Communist Party and the Senate Committee on Aging and Members of Congress, we write to express grave concern over the continued presence of Chinese companies on U.S. stock exchanges. These entities benefit from American investor capital while advancing the strategic objectives of the Chinese Communist Party (CCP), supporting military modernization and gross human rights violations. As described below, they also pose an unacceptable risk to American investors. We urge the Securities and Exchange Commission (SEC) to use its existing authorities to protect U.S. markets, investors, and national security.
These high-risk firms operate across multiple sectors but share common characteristics: many face U.S. government restrictions, maintain hidden Party control mechanisms, secretly support Chinese military applications, or are linked to slave labor.
COMPANY TKR VIE Qifu Technology QFIN ?
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Daqo New Energy DQ Alibaba BABA ?
SANCTIONS
EL2; 1260H UFLPA3
GOLDEN SHARE
MIL-CIV FORCED PARTY FUSION** LABOR BRANCH*
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1260H1
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1260H
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1 Entities that are themselves, or whose parent entities are, designated as Chinese military companies by the Department of Defense pursuant to Section 1260H of the National Defense Authorization Act for Fiscal Year 2021.
2 Entities that are themselves, or whose parent entities are, on the Commerce Department’s Entity List.
3 Entities that are themselves, or whose parent or affiliate entities are, included on the Uyghur Forced Labor Prevention Act (UFLPA) Entity List maintained by the U.S. Department of Homeland Security.
Several also use variable interest entity (VIE) structures, which obscure true control and leave U.S. investors with no direct ownership over the Chinese operating company.
The firms listed above are merely examples. They illustrate deeper, structural problems posed by the CCP’s control over Chinese companies that make the listing of their securities on U.S. exchanges untenable.
First, in the People’s Republic of China, no company is truly private. The CCP maintains sweeping authority over all firms—whether state-owned or nominally private— through legal mandates and political control mechanisms. Under the 2017 National Intelligence Law, all organizations and individuals are obligated to “support, assist, and cooperate with state intelligence work,”1 and the Cybersecurity Law requires companies to “provide technical support and assistance to public security organs” upon request.2 In 2020, the CCP expanded its grip on the private sector, directing entrepreneurs to align with Party priorities and participate in “united front” work3—a strategy that advances CCP influence and supports intelligence collection for agencies like the Ministry of State Security.4 These mandates are enforced through coercive instruments such as embedded Party committees5 and “golden shares”— state-held equity stakes that grant outsized control despite minimal ownership.6
Second, the extent of CCP control over Chinese firms is systematically concealed from U.S. investors. Chinese law prohibits companies from making disclosures that “misrepresent or disparage” national policy,7 and the amended Counterespionage Law classifies information about military ties, state ownership, and Party influence as national secrets.8 As one witness testified before the Select Committee, “companies now can’t even do due diligence in advance of any sort of business transaction” in the PRC for fear of violating Chinese law.9
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