Republican senator Marco Rubio lambasts ‘reckless and irresponsible’ Didi listing

A leading China hawk in the US Congress has lashed out at Chinese listings in the US in the wake of the botched initial public offering of ride-hailing app Didi Chuxing, as the debacle attracted scrutiny in Washington.

Marco Rubio, Republican senator from Florida, told the Financial Times in a statement that it was “reckless and irresponsible” to allow Didi, which he described as an “unaccountable Chinese company”, to sell shares on the New York Stock Exchange.

He added that Beijing’s regulatory crackdown, which triggered a brutal share price decline in the wake of the IPO, “further underscores the risks” for US investors in Chinese companies.

“Even if the stock rebounds, American investors still have no insight into the company’s financial strength because the Chinese Communist party blocks US regulators from reviewing the books,” Rubio said. “That puts the investments of American retirees at risk and funnels desperately needed US dollars into Beijing.”

On Wednesday, Bob Casey, the Democratic senator from Pennsylvania, added his criticism. “We must ensure entities listing on US exchanges play by the same rules as US firms and comply with regulations and auditing standards,” he said in a statement to the FT.

“The Chinese Communist party has the ability to exercise command and control over firms operating within its borders. At the same time the CCP restricts market access to US firms in order to support its own national champions, distorting markets and harming US workers,” he added.

The comments highlighted how the troubled Didi IPO could stoke efforts in Congress to tighten the screws on Chinese listings in the US.

Last year, former president Donald Trump signed legislation imposing tougher accounting standards on Chinese entities that sell shares in the US after a groundswell of support from lawmakers.

The law in effect bars companies from listing in the US if they fail to submit to audits from the Washington-based Public Company Accounting Oversight Board for three years.

But China critics in Washington believe the legislation should serve as the starting point for a broader decoupling of capital markets between the countries.

“This fiasco will only strengthen the resolve of many on Capitol Hill and elsewhere to demand greater US investor protection with regard to Chinese companies in our capital markets,” said Roger Robinson, a former chair of the US-China Economic and Security Review Commission.

Robinson, who is now chief executive of RWR Advisory Group, a Washington-based consultancy, added that the episode served “as a fresh reminder to Wall Street of the capriciousness of [the communist party’s] market interventions and the party’s total disregard for the cascading downsides”.

Washington’s focus on Chinese listings in the US was raised after regulators charged Luckin Coffee, the Chinese coffee shop chain, with defrauding investors, forcing the company to pay a $180m settlement. This year, Luckin filed for bankruptcy protection in the US.

But while US regulators took a leading role during the Trump administration in raising alarm bells about Chinese listings in the US, the Biden White House has not yet reacted to the botched Didi IPO. The US Treasury department declined to comment, as did the Securities and Exchange Commission.

Additional reporting by Kiran Stacey in Washington

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