In recent years, the number of Chinese companies going public in the United States has been increasing since 2024. However, the amount of financing has seen a sharp decline. More significantly, some small Chinese listed companies have engaged in “pump and dump” schemes to deceive American investors, resulting in lawsuits filed by US regulatory authorities. Analysts believe that Chinese listed companies and the US stock market are drifting further apart, making the delisting of Chinese companies from the US market inevitable.
According to data provided by Wind, a data provider, more than 80 Chinese companies have delisted from US stock exchanges since 2019. Currently, about 275 Chinese companies are listed on the New York Stock Exchange and Nasdaq, accounting for less than 2% of the total market value of stocks on the two major exchanges.
The Wall Street Journal reported on Monday (June 23) that although the number of Chinese companies going public in the US was the highest in years in 2024, most of them were small-scale, speculative stocks, unlike the previous billion-dollar “red chip” companies. The average fundraising amount for the IPOs of 62 Chinese companies in 2024 was less than $7 million.
According to data from Huaxin Capital, 47 companies in 2024 raised less than $10 million in their initial public offerings, accounting for 76% of the total. Only 4 companies raised over $100 million – Amafen Sports, Zikr Automobile, Wen Yuanzhixing, and Xiaoma Zhixing.
As of April, 28 Chinese companies have gone public on US stock exchanges in 2025, an increase of 14 compared to the previous year. However, the total fundraising amount reached only $340 million, nearly 80% down from the $1.68 billion raised the previous year, indicating a general decrease in the size of companies going public in the US.
Some companies are even struggling to maintain the minimum requirement of 300 public shareholders, a dangerous signal for investors, indicating potential risks and even outright scams.
Last week, it was reported that Huaxia Boya, a company claiming to offer international learning programs to Chinese students, raised nearly $21 million from 30 large investors in December 2024 through a scheme involving manipulation to hype up stock prices. Seven investors used Facebook ads and WhatsApp messages to deceive over 600 victims, selling more than 50 million shares and making profits exceeding $480 million.
Nasdaq suspended trading of Huaxia Boya’s stock on June 3.
According to sources, US authorities have recently focused on suspicious stock trades of several other Chinese companies, including Lixiang Education and NetClass Technology.
NetClass Technology went public in December 2024 with its stock priced at $5 per share, raising approximately $10 million. The stock price steadily rose to a peak of $51 in early May but then plummeted a few days later. Currently, NetClass Technology’s stock is trading slightly above $2.
University of Utah professor Braden Lindstrom fell victim to a financial advisor’s advice and purchased stock of Jayud Global Logistics, a company based in Shenzhen, on the Nasdaq stock market, losing $80,000 in the process. The company’s stock price had a month-long surge from December 2024, reaching $8 per share, before crashing to $0.35 on April 1, a 96% drop. Currently, the company’s stock is priced at $0.19 per share.
In recent years, this cash-out strategy of Chinese companies in the US stock market has repeated dozens of times, making these stocks susceptible to manipulation and tempting thousands of American retail investors to buy in.
At the end of 2020, the US passed the Holding Foreign Companies Accountable Act, requiring Chinese companies to provide accounting information to US regulatory authorities for inspection. Under the act, companies not complying with regulatory standards for three consecutive years can face delisting and trading bans.
The Trump administration pledged to review the ownership structures of Chinese companies listed in the US.
However, many Chinese companies use the Variable Interest Entity (VIE) structure to circumvent US listing requirements. In the VIE model, a Chinese company seeking to list in the US first establishes a shell company in an offshore jurisdiction, such as the Cayman Islands, to register for listing, separating it from the operations within China. Through complex contractual relationships, the shell company has the right to claim the profits of the original company, making the original company a “variable interest entity” of the listed shell company.
When US shareholders purchase stock of Chinese companies, they are essentially buying stock of the shell company, meaning they do not actually own equity in the Chinese company, unlike regular US-listed companies.
According to the US-China Economic and Security Review Commission, more than half of the 286 Chinese companies listed on US exchanges as of early March used the Variable Interest Entity structure.
The Wall Street Journal reported that since the listing of the automotive manufacturer Zeekr in May 2024, the New York Stock Exchange has not seen any new listings from Chinese companies.
In the US, there are three main stock exchanges: the New York Stock Exchange, the Nasdaq Stock Market, and the American Stock Exchange. Nasdaq accounts for the vast majority of Chinese concept stocks listed in the US, including companies like Baidu, Pinduoduo, Xpeng Motors, and iQiyi; followed by the New York Stock Exchange, where Chinese concept stocks like Alibaba, New Oriental, and Xpeng Motors are listed. The number of Chinese concept stocks listed on the American Stock Exchange is relatively small.
Junheng Li, founder of JL Warren Capital, stated that the delisting of Chinese companies is inevitable, as cryptocurrency and artificial intelligence present more exciting investment opportunities. When she founded the research company JL Warren Capital in 2012, Wall Street was focusing on the East, and China was the “hottest” investment theme at the time.
In May of this year, Paul Atkins, the Chairman of the Securities and Exchange Commission (SEC), received a letter from state treasurers of 23 states and other financial officials, urging for the mandatory delisting of Chinese concept stocks. Legislation aimed at allowing retirement funds to divest from investments in Chinese concept stocks has been advancing in state legislatures following federal policy adjustments in 2023.
Two prominent Republican lawmakers, House Republican Special Committee Chairman John Moolenaar and Senate Republican Committee Chairman Rick Scott, wrote to SEC Chairman Paul Atkins on May 2, requesting action be taken against 25 Chinese companies listed on US exchanges.
These lawmakers believe that companies like Alibaba, Baidu, and JD.com have ties to the Chinese military, posing “unacceptable risks” to investors.
Moreover, the Chinese government has been controlling the listing of some state-owned enterprises and high-performing companies in the US stock market, prompting some companies to delist from the US. Ride-hailing company DiDi Global, after its $4.4 billion IPO on the NYSE in 2021, delisted shortly after a few months of investigation initiated by Beijing.
Being listed in the US was once considered the pinnacle of success for Chinese companies, with the NYSE and Nasdaq vying to attract hot IPOs from Chinese companies. Prior to 2014, internet companies like Alibaba, Baidu, and JD.com, along with state-owned enterprises and central enterprises like China Mobile, China Eastern Airlines, and PetroChina, listed on US stock exchanges. However, now Alibaba stands out, representing 30% of the total market value of all Chinese concept stocks listed in the US.