The fast-food giant Yum China; biotechnology companies BeiGene, Zai Lab and HutchMed; and technology company ACM Research were named by the SEC in accordance with a law passed in December 2020 requiring Chinese companies listed on American exchanges to allow US inspectors to review their financial audits.

Yum China, which is the operator of KFC and Pizza Hut in China and is worth US$21 billion, closed down nearly 11%, and the news triggered a wider sell-off for US-listed companies from China that could be eligible for delisting in the future. Pinduoduo closed down 17.5%, JD.com was down over 15% and Alibaba fell almost 8%.

Thursday’s notice triggered the three-year countdown set by the Holding Foreign Companies Accountable Act for foreign companies to comply with its auditing requirements. China has restricted companies from complying with such audits due to concerns over data privacy.

“We respect overseas regulators’ efforts to strengthen supervision over accounting companies to improve the quality of the financial information of listed companies but firmly oppose the wrong practice of some forces politicising securities regulation,” the China Securities Regulatory Commission said via its WeChat account in response to the announcement.

“We believe that through joint efforts, the two sides will work out cooperation arrangements that meet the legal and regulatory requirements of both countries as soon as possible,” the commission said.

The news comes almost a month after the first IPO for a Chinese company in the US since July 2021. The dearth of Chinese IPOs has followed rising unease over Chinese-listed companies on Wall Street and the debacle of Didi’s IPO and eventual delisting last year.