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, the Florida Republican senator, 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 regulatory crackdown from Beijing that 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.”

Rubio’s comments highlight how the troubled Didi IPO could stoke new 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 selling shares in the US after a groundswell of support in Congress.

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 in a row.

But China hawks in Washington believe the new legislation should serve as the starting point for a broader decoupling of capital markets between the two 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 Congressional 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 prompted after regulators charged Luckin Coffee, the Chinese coffee shop chain, with defrauding investors, forcing the company to pay a $180m settlement. Earlier this year, Luckin filed for bankruptcy protection in the US.

But while US regulators during the Trump administration took a leading role in raising alarm bells about Chinese listings in the US, the Biden administration 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