Senate move to require US-listed companies to certify that they are not under control of foreign governments appears aimed at stopping US capital boosting China's tech giants. File pic by AFP.

The US Senate on Wednesday approved – by unanimous consent – a bill that requires US-listed companies to certify that they are not under the control of foreign governments. A similar bill is being prepared in the US House of Representatives.

Might this get the likes of Alibaba delisted on the grounds that Jack Ma is a Communist Party member or bar Ant Financial, operator of Alipay, from listing in New York?

Apparently, that’s the aim of the bills’ sponsors in a bid to prevent US capital from helping China’s technology giants develop leading positions in everything from 5G to Cloud services to artificial intelligence to big data and quantum computing. 

Huawei is not a listed company, so it won’t be touched by this. But, of course, US moves to deny Huawei access to sophisticated chip technology is made of the same cloth.

Also read: Huawei draws line in the sand amid US-China tensions

China lost no time to retaliate … with confidence and the right stuff: Just ahead of the opening session of the National People’s Congress, it announced a massive $1.4 trillion crash development programme in precisely the technology areas targeted by US sanctions.

Time will tell the outcome of this technology denial – technology development race. But for now, it’s not good news for Chinese stocks or the yuan. There was no large-scale sell-off in Asian equities and currencies, but given the very upbeat US overnight stocks lead, investor concerns were obvious.

The PBoC, optimistically, had set morning yuan parity at 7.0868. But by 7pm HK time, CNY traded at a much weaker 7.1038 and CNH (offshore CNY) at 7.1118.

US moves to restrict capital inflows to China are clearly bothering the yuan. The question is how China will react to the latest moves. Chinese commentators increasingly are calling for Beijing to bring into play its own nuclear option, the sale of US Treasury bonds.

The escalation risk is there, unless calmer US voices prevail.

Also read: Markets nervous amid US-China verbal duel

Also read: China’s central bank keeps powder dry as others empty toolkit

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