The latest scandal involving a Nasdaq-listed Chinese company, this time using fake gold as collateral , will add fresh ammunition to American politicians already hostile to China Inc. Kingold Jewelry, the Wuhan-based jeweller, was found to have used 83 tonnes of “gold bars”, which later turned out to be gilded copper, to secure 20 billion yuan (US$2.8 billion) in loans from multiple mainland financial institutions. The expose came less than three months after Luckin Coffee, once billed as the mainland’s answer to Starbucks, admitted a US$310 million accounting fraud. Chinese companies are now being tarred with the same brush in the United States, and the Senate has passed a bill that will likely force many to delist and block a pipeline of mainland firms seeking to raise funds in the country. There are 335 China-domiciled stocks listed in the US markets; most operate perfectly legitimate businesses. Any country with a large number of stocks is bound to have a few bad apples. The US markets were the happy hunting grounds for such textbook fraud cases as Enron, CUC International/Cendant, WorldCom, Tyco International, and Qwest Communications. Remember Bernie Madoff, anyone? Germany, with a reputation for financial rectitude, has been rocked by the collapse of Wirecard, once the flagship of the country’s fintech industry, after admitting to a € € 1.9 billion (US$2.15 billion) accounting fraud. Unfortunately, at a time of rising Chinese-American tensions, fairness is not a priority for Washington, which is happy to weaponise any hint of impropriety to bad-mouth mainland companies and attack Beijing. But China is not blameless. The fake gold collateral involved borrowings over the past five years from at least 14 Chinese financial institutions. State-owned insurer PICC Property and Casualty was among the firms covering the loans, and Kingold’s US auditor is Friedman LLP. Legitimate questions need to be raised about proper due diligence at those companies as mainland regulators look into the case. This is crunch time for Chinese companies looking to raise capital, and for mainland authorities trying to decide the future of Sino-American business relations. Under the Senate bill, foreign firms will have to submit to audits by the US Public Company Accounting Oversight Board and prove they do not have links to government agencies. A mechanism has existed since 2012 for the China Securities Regulatory Commission, the mainland’s securities watchdog, to facilitate cross-border audit inspections with the board. But in an election year, US politicians either have forgotten the facts, or are ignoring them. Mainland companies caught in the middle may have no choice but to repatriate back to the mainland – and Hong Kong – markets.