Chinese companies could vanish from Wall Street in the next three years.

It is widely acknowledged that there is financial strain between the United States and China. This tension has recently started showing in more concrete manners. Beijing has been urging Chinese companies to withdraw from western stock exchanges due to perceived security risks. One of the latest instances of this pressure was seen with the rideshare company Didi. Ironically, just this month, the United States Securities and Exchange Commission introduced new regulations allowing the prohibition of foreign companies from being listed on the US stock market if they pose a security threat.

As both sides toughen their regulations, analysts foresee that Chinese companies will eventually stop listing on Western stock markets altogether.

“I believe that for many Chinese companies listed on US markets, it’s essentially game over,” said David Loevinger, managing director for emerging markets sovereign research at TCW Group, in a statement to CNBC. “This issue has been looming for 20 years — we haven’t been able to resolve it.”

Loevinger mentioned that the chances of the United States and China resolving their differences in the coming years, before the financial ties sever completely, are slim. “Thus, it is likely that by 2024, most Chinese companies listed on U.S. exchanges will no longer be included in the United States. Most will shift back towards Hong Kong or Shanghai,” he explained.

Wall Street is becoming increasingly positive about Chinese stocks https://t.co/bZe1so0ADN

— Bloomberg Markets (@markets) December 14, 2021

“We have reached a turning point already,” Loevinger noted, referring to Didi’s removal. “I doubt that China’s government will permit US regulators to freely access the internal auditing records of Chinese companies.”

“And if US regulators are unable to access those records, they won’t be able to safeguard US markets against fraud,” he concluded.