As major Chinese state-owned firms recently announced they would apply to be delisted from US stock markets, uncertainty has arisen on whether this is a harbinger of accelerated decoupling between the world's two largest economies.

The decisions that came last week from five major companies, including China's oil giants, came amid outrage over a US law requiring American regulators to inspect the audits of Chinese firms.

Firms such as PetroChina, China Life Insurance, the Aluminum Corporation of China, Sinopec, and Sinopec subsidiary Shanghai Petrochemical Co. said they were planning to exit the New York Stock Exchange this month.

Many other Chinese firms may follow suit as China has been refusing to allow overseas regulators to inspect local accounting firms, invoking its state security laws to block US regulators from conducting these inspections.

"This is the beginning of a tidal wave of some of the big guys delisting from the US as it has come in the wake of harassment and coercion of various enterprises by Washington," Andrew K.P. Leung, an independent China strategist in Hong Kong, told Anadolu Agency.

Washington's pretext that the firms allegedly flout US laws has "scared a lot of Chinese companies," added the international strategist.

Publicly traded firms in the US are to have their auditors scrutinized by American regulators under the Holding Foreign Companies Accountable Act (HFCAA) that passed in 2020.

The legislation bans securities trading by public companies that fail to meet auditing requirements three years in a row, with 2024 set as a deadline for Chinese companies that need to choose between complying or delisting.

Around 200 Chinese companies may have to delist if the sides cannot compromise soon or it will be a process in which China will have to choose which companies it will permit to be listed in the US.

Is decoupling from US markets easier?

The HFCAA will lead to a "retreat from the American stock market," according to Leung. "It may not necessarily impact imports from China to the US, as some import bans by the Joe Biden administration has already hurt American consumers, fueling inflation."

Accusing the US of demonizing China, he argued that this would not be enough to cast a shadow on Chinese companies. "More and more countries do not want to be beholden to American rhetoric," he added.

But, decoupling will not be easier, he underlined.

People are differentiating "between rhetoric and real business," he said, pointing to the rise in Chinese exports over the last one-and-a-half fiscal years to both the US and other countries. He acknowledged, however, that the EU could "tighten some of the rules, as it has some reservations."

Chinese companies are meanwhile looking to get listed in Hong Kong and Singapore, he added.

Alibaba Group Holding was recently added to the delisting watchlist, and announced that it would be seeking a primary listing in Hong Kong.

Leung argued that the US would not be able to prosecute "any Chinese company or its executives if there is no evidence to link Chinese big tech to the Communist Party of China."

Einar Tangen, a senior fellow from the Beijing-based Taihe Institute, said that the US was "ramping up its America First, home shoring program."

Pointing to the new CHIPS Bill, which will subsidize American semiconductor manufacturers at the expense of Taiwan, South Korea, and Japan, Einar said Taiwan "in particular will be hit hard as it currently exports 90% of the advanced chips the US uses."

"Semiconductors represent 25% of Taiwan's gross domestic product and 40% of its exports. If the US strategy is successful, it will devastate Taiwanese economy and eviscerate its strategic value," he said.

Chinese firms expecting 'Huawei treatment'

Given that this is "what the US is doing to allies," said Einar, adding Chinese companies are expecting more "Huawei treatment," getting out "before they are forced out."

The US has accused the China-based tech giant of using tactics to share information with Beijing -- claims that the company has rejected allegations.

Einar said data generation and flows have been deemed issues of national security. "Now, countries are erecting cyber walls that will also wall out foreign competitors in every area of the digital economy, resulting in less innovation and higher prices for the end consumers."

As many Chinese firms are involved in data, he added, they see the US' behavior as "ultra-protectionist."

However, bilateral trade is unlikely to be affected by this, Einar said.

"Trade will remain relatively strong because of China's position in the supply chain in terms of cost and availability," he insisted, adding the companies delisting were doing so defensively.

The one aspect on which the US and China have made little headway is mutually acceptable accounting standard for Chinese companies. "The second, is the general level of economic, political, and security pressure Beijing perceives coming from the US."

"Given what the US was willing to do to Taiwan, they believe they have a short future in the US as it turns towards economic nativism," he concluded.