Delisting Chinese companies from the U.S. stock market is a "pointless" move that will neither deny them access to U.S. capital nor slow China's growth, according to a report by U.S. think tank the Peterson Institute for International Economics (PIIE).

Relations between the U.S. and China have entered a downward spiral since President Donald Trump came to power, with protectionist policies from the White House leading to a trade war. The latest front of the battle is in the stock market. In June, Trump urged the country's pension fund not to invest in U.S.-listed Chinese firms, and threatened to delist Chinese firms from Wall Street, the global financial center.

However, the PIIE noted that ousting Chinese companies from the U.S. stock market won't deny them access to U.S. capital. "The capital raised by these Chinese firms on U.S. stock markets come from international investors, not U.S. residents," according to the report.

Chinese companies can still receive investment from Americans via the private equity market, or list on other global stock exchange markets, such as Hong Kong and Singapore, two of Asia's financial hubs.

The report used the example of Chinese firm 58.com to illustrate the point. U.S. private equity firms Warburg Pincus and General Atlantic led a deal in June to buy out the Chinese online information and service trading site, which currently trades on the New York Stock Exchange. When the deal is done later this year, existing shareholders will be bought out at a premium price, and the company will no longer trade on public markets, rather raise money through private equity firms.

The number of go-private deals of U.S.-listed companies surged in the first half of 2020, according to the PIIE.

In addition, a growing number of Chinese companies that are already listed in the U.S. have sought secondary listings in Hong Kong to be less dependent on the U.S. stock market. China's e-commerce giants Alibaba, JD.com and gaming giant NetEase have all completed secondary listings in Hong Kong.

Once those companies have built up enough trade volume to make the HK listing primary, they can drop their existing primary listing. The PIIE report stated the above-mentioned tech giants are all positioned to drop their U.S. listings. The primary beneficiary of a U.S. delisting policy would appear to be the Hong Kong Stock Exchange.

"US institutional investors and US residents who want to own shares in these companies will simply buy them in Hong Kong," according to the PIIE report.

"The key point is that the market for capital is global. Shutting out Chinese firms from listing in the United States would not deny these firms access to US capital."