CHINA said foreign short sellers targeting Chinese companies listed in the United States are engaged in a “malicious act,” in an editorial published by Xinhua on Wednesday.

The editorial, titled “U.S. firms poison reputations of China start-ups for profit,” represents the first time China has taken a position on a running public brawl between a group of Chinese technology executives and Los Angeles-based short seller firm Citron Research.

The commentary urged the U.S. Securities Exchange Commission to investigate short sellers like Citron Research and suggested that Chinese firms might stop listing in the United States if they don’t receive better treatment.

“With the U.S. economy floundering for so long, the United States cannot afford to have a capital market that attracts little interest or participation from Chinese companies.”

On Monday, former Google China executive Kai-fu Lee and over 60 other Chinese business leaders published an open letter accusing Citron Research of deliberately spreading lies about listed Chinese firms, in particular Qihoo 360 Technology, to profit when their share prices decline.

Citron Research denied the charges and said that Lee has a conflict of interest because he has a business relationship with Qihoo 360.

Short sellers, who borrow stock to sell at a high price and buy back the stock at a lower price if share values drop as expected, earned vast sums from successful attacks on overseas-listed Chinese companies in recent years.

The Xinhua editorial admitted that short sellers did find genuine problems at some firms but said that they are now unfairly targeting quality Chinese firms.

(SD-Agencies)