Given that the two countries are already pitted against each other in sectors ranging from trade to high-tech, and the US Senate recently approved sweeping legislation that could result in non-US companies that fail to meet a number of strict criteria being barred from trading on US stock exchanges, which has been widely perceived as targeting Chinese enterprises, US Secretary of State Mike Pompeo's recent remarks tarring all Chinese listed companies with the same brush of fraud suggest that Washington is opening up a new front against China in the capital market as part of its broader pressure campaign against China.

By unilaterally changing the rules of play for Chinese companies rather than working to find a mutually satisfactory way of collaborating to address investor concerns, Washington is trying to politicize a market regulatory issue, in an attempt to cut off Chinese companies from the US capital market and thus weaken China's economic prowess.

The recent audit scandal of Chinese coffee chain Luckin Coffee has highlighted the need for closer scrutiny of Chinese companies listing on the US stock market. There is nothing wrong with that — as financial transparency and accountability are key to preventing fraud and protecting investors' interests.

But the problem is, the bill approved by the US Senate, if signed into law, requires Chinese publicly listed companies to let their financial audits be reviewed by the US Public Company Accounting Oversight Board. This would effectively bar Chinese companies from listing in the US as Chinese laws restrict foreign access to major accounting information on the grounds of national security and State secrecy.

If regulators and investors are serious about avoiding crises like that of Luckin Coffee in the future — there needs to be a regulatory framework that provides transparency and protects investors. The regulatory authorities from the two countries signed an agreement in 2013 to try to establish a cooperative framework for the effective exchange of audit documents between regulators as they play their supervisory roles over listed companies, but despite acknowledging respect for foreign sovereignty and requiring respect for its own, the US has been trying to take advantage of this to try and pry into China's State secrets and the discussions have reached a stalemate.

Now, going against the trend of increasing global acceptance of Chinese listed companies, as reflected in the continuous rise in the weighting of Chinese-listed stocks in index compiler MSCI's bench mark indexes, instead of encouraging the PCAOB to redouble its efforts to reach an agreement with its counterpart in China, the US administration is seeking to exclude Chinese companies from the US stock market.

China holds a zero-tolerance attitude toward financial fraudulent activities of listed companies, and it is willing to work with the US to address the problems.

However, the US remarks and actions sentencing all Chinese companies for the behavior of a few, show that it is the one that is unwilling to fix the problems, preferring instead to manipulate the oversight issue for political purposes.