Why does the US allow Chinese tech companies to go public on American stock exchanges when China blocks Google and Facebook and others from operating in China?
For one, Chinese tech companies are not in any sense responsible for the Chinese government’s policy of blocking certain American websites. That policy isn’t undertaken as economic protectionism, though it may have collateral results that do shelter domestic Chinese websites. Rather, it’s about preservation of social and political stability. In areas where China’s political leadership sees no threat to social and political stability, it hasn’t blocked operation.
Second, access to American capital markets by China’s tech companies creates value for the predominantly U.S.-based investors who trade those companies’ shares. Only a very small number of Qualified Domestic Institutional Investors in China are able to trade on overseas bourses. They’re absolutely dwarfed by the U.S.-based investors. Were the U.S. to prevent the couple of dozen Chinese tech companies now listed on the NYSE and NASDAQ from trading, the U.S. would be shooting itself in the foot.
Third, the Securities Exchange Commission traditionally just isn’t really an arm of U.S. foreign policy and I can’t think of an instance in which it really has been.
If the interest is in promoting a more robust and freer internet environment in China, I would submit that no institutions have done more to advance that very cause than these companies themselves, many of which were founded by American-educated Chinese returnees, funded by American venture capital, and listed on American stock exchanges. They’re the ones that have created the first real public sphere in China, and are pushing the envelope wherever they can.