The Implementation Status and Future Trends of Holding Foreign Companies Accountable Act and Challenge to China

The Holding Foreign Companies Accountable Act (HFCAA) of the United States, effective since 2020, has significantly strengthened audit oversight requirements for Chinese-listed companies, marking a pivotal step in reshaping the U.S. regulatory framework for capital markets. As a political legacy of President Trump’s first term, the enforcement of HFCAA may be escalated upon his return to office, triggering systemic shocks to the valuation of Chinese concept stocks, U.S.-China financial ties, and the global market structure. This study focuses on three critical dimensions of policy adjustments during the Trump administration: (1) trajectories of regulatory enhancement; (2) risks of financial decoupling between China and the U.S.; and (3) restructuring effects on international capital flows. It proposes that China should construct a strategic response system through: (a) establishing a legal counterbalancing mechanism framework; (b) refining its domestic capital market ecosystem; and (c) strengthening cross-border regulatory coordination and remedial mechanisms. The research aims to provide theoretical foundations and policy references for anticipating HFCAA regulatory evolution and fostering enhanced Sino-U.S. regulatory collaboration.