Two Republican lawmakers are urging the U.S. Securities and Exchange Commission (SEC) to remove major Chinese companies, including e-commerce giant Alibaba Group and search engine provider Baidu Inc., from American stock exchanges, citing national security risks stemming from alleged military links.
The Financial Times reported on Friday, May 2, that John Moolenaar, chair of the House China committee, and Rick Scott, chair of the Senate committee on ageing, sent a letter to SEC chair Paul Atkins urging action against 25 specific Chinese firms listed in the U.S.
The lawmakers argue that these companies exploit American capital while furthering the strategic goals of the Chinese Communist Party. “These entities benefit from American investor capital while advancing the strategic objectives of the Chinese Communist party . . . supporting military modernisation and gross human rights violations,” the letter stated, according to the FT report. It further contended, “They also pose an unacceptable risk to American investors.” Beyond Alibaba and Baidu, the targeted group reportedly includes online retailer JD.com and the social media platform Weibo.
Allegations of State Influence and Investor Risk
The core assertion from Moolenaar and Scott is that the named Chinese companies, irrespective of their commercial facade, are “ultimately harnessed for nefarious state purposes.” This reflects a persistent apprehension within parts of the U.S. government regarding the entanglement of China’s private sector with state and military objectives.
The lawmakers specifically invoked the Holding Foreign Companies Accountable Act (HFCAA) as the mechanism for the SEC to act. While the HFCAA was primarily enacted to address concerns about the inability of U.S. regulators to inspect audit work papers of foreign companies listed stateside, Moolenaar and Scott argue the SEC possesses the authority under this act to suspend trading and compel the delisting of these 25 firms based on broader security grounds.
Part of Wider US-China Tech and Trade Friction
This push for delisting represents the latest development in a period of escalating economic and technological friction between Washington and Beijing. It follows closely on the heels of tightened U.S. export controls targeting China’s access to advanced artificial intelligence hardware. Effective April 15, 2025, the U.S. Commerce Department effectively banned the sale of Nvidia’s H20 AI chip to China, a processor specifically designed to comply with earlier restrictions that had already blocked more powerful Nvidia GPUs. Citing national security, this move forced Nvidia to take a US$5.5 billion financial charge and prompted the company to begin developing yet another generation of compliant chips for the Chinese market.
These chip controls have created opportunities for Chinese domestic players like Huawei, which is ramping up shipments of its Ascend 910C AI processor and has announced the even more powerful Ascend 920. This dynamic underscores China’s ongoing push for semiconductor self-sufficiency, backed by state initiatives like the $47.5 billion “Big Fund” aimed at bolstering its domestic chip industry. Enforcement of U.S. tech controls remains complex, highlighted by a recent U.S. House probe into Nvidia’s Asian sales and reports of U.S. scrutiny regarding TSMC’s potential links to Huawei’s supply chain.
Market Implications
Beyond semiconductors, trade policies have also tightened. Effective May 2, 2025, the U.S. eliminated the $800 “de minimis” tariff exemption for small packages from China and Hong Kong, imposing tariffs of 120% (postal) or 145% (other carriers) and significantly impacting e-commerce sellers and consumers. This occurred shortly after the Trump administration announced new global tariffs based on a controversial formula in early April.
Currently, over 100 Chinese companies are listed on U.S. exchanges, with a collective market cap around $1 trillion. The potential delisting of 25 firms, including major players like Alibaba and Baidu, could restrict their access to deep U.S. capital markets and negatively impact American investors holding their shares. Many Chinese firms maintain secondary listings in Hong Kong, potentially softening the blow, but removal from U.S. exchanges would still be disruptive. As of the FT report, the SEC and the named Chinese companies had not commented on the lawmakers’ letter. The situation adds another layer of uncertainty as Beijing concurrently stated it was “evaluating” a U.S. offer for talks regarding tariffs.
