The United States’ accounting watchdog has been looking into audits of Wall Street-listed Chinese firms in Hong Kong in recent weeks, a source familiar with the matter said on Friday.
US auditors are likely to inspect about a dozen Chinese firms, including Tencent Music Entertainment Group, Didi Global and NetEase, in a fresh round of routine checks, amid a heated trade and technology war between the world’s two biggest economies.
The inspections are part of an agreement signed between Washington and Beijing to prevent the delisting of close to 250 US-listed Chinese firms, with a combined market cap of $2.1 trillion, this year.
The visit, led by US audit watchdog the Public Company Accounting Oversight Board (PCAOB), would continue field work from a previous trip by officials in March, the source said.
Washington’s inspections of Chinese companies follow a long-running dispute over auditing compliance of US-listed Chinese firms. Beijing has long been reluctant to let overseas regulators inspect local accounting firms, citing national security concerns.
The dispute threatened to cut China’s access to the world’s biggest capital market while putting $1.1 trillion of American investments at risk.
Ultimately, after several rounds of negotiations with Beijing regulators, the PCAOB said in December it had gained full access to inspect and investigate US-listed Chinese companies for the first time.
The watchdog previously said it would demand complete access in mainland China and Hong Kong in their regular inspections from 2023.
- Reuters, with additional editing by Vishakha Saxena