The risky loophole Chinese companies have been using for years

A version of this story first appeared in CNN Business’ Before the Bell newsletter. Not a subscriber? You can sign up Hello, regulators: US Securities and Exchange Commission boss Gary Gensler announced new disclosure rules on July 30 targeting VIEs, saying Chinese companies need to be clearer with US investors about the risks.”I worry that average investors may not realize that they hold stock in a shell company rather than a China-based operating company,” he said.One of the new SEC provisions will require Chinese companies to disclose “whether the operating company and the issuer, when applicable, received or were denied permission from Chinese authorities to list on US exchanges.”That provision appears to be aimed at Didi. Just days after its massive IPO, Chinese regulators targeted the company with a cybersecurity investigation after it reportedly went ahead with the listing despite Beijing’s objections.”I believe these changes will enhance the overall quality of disclosure in registration statements of offshore issuers that have affiliations with China-based operating companies,” Gensler said.China is also taking a closer look at foreign listings. The powerful Cyberspace Administration of China proposed in July that any company with data on more than 1 million users must seek the agency’s approval before listing its shares overseas.Investors, beware.Biden’s electric vehicle sales goal won’t be too hard to reachPresident Joe Biden announced an agreement last week that aims to push the US auto industry to sell more electric vehicles. The goals include a “shared aspiration” that 40% to 50% of vehicles sold in the US will be electric, plug-in hybrids or hydrogen-powered.This will be a challenge, some experts say — but it isn’t really as hard as it might seem, reports my colleague Peter Valdes-Dapena.Battery-powered vehicle sales, including both all-electric and plug-in hybrids, are expected to make up just 4.3% of all vehicles sold in the US this year, according to IHS Markit.General Motors (GM) said months ago it hopes to sell only zero-emission vehicles, including electric and hydrogen-powered, by 2035. It could be expected, then, that at least 40% of its vehicle sales should be emissions-free by 2030. Stellantis, the company that owns the Dodge, Chrysler and Jeep brands, also recently said it planned for 40% of its US sales to be either electric or plug-in hybrid by the end of 2025, well ahead of the goal set by the Biden administration. Ford has also already announced that 40% of the vehicles it sells globally will be electric by 2030.Automakers have been setting these goals for a number of reasons. Regulations are already changing in other parts of the world, such as in Europe, where there are plans to ban internal combustion vehicles by 2035. Consumer tastes are also changing — as the increasing popularity of Tesla (TSLA) has shown, said Jessica Caldwell, an industry analyst with Edmunds.”No one really wants to be seen as the holdout or the dinosaur, the one that’s fighting this progress,” she said.Monday: Earnings from Tyson Foods (TSN), Air Products (APD) and Nutrien (NTR)Tuesday: Earnings from Sysco (SYY) and Coinbase GlobalWednesday: US consumer price index; Data on US crude oil inventories; Earnings from eBay (EBAY) and NIO (NIO)Thursday: US jobless claims; US producer price index; Earnings from Baidu (BIDU), Palantir Technologies, Airbnb and Disney (DIS)Friday: University of Michigan consumer sentiment