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China-US Audit Row Hinges on ‘Wisdom of Both’, Says CSRC

China Securities Regulatory Commission said whether Chinese firms listed in US are delisted depends on progress and results of audit and regulatory cooperation.


AmCham China wants Washington and Beijing to boost bilateral engagement, the SCMP says.
The cost of decoupling between the US and China would be significant and generate no clear winners, the chamber said. File photo: Reuters.

 

China’s securities regulator said on Thursday both China and the US have a willingness to solve their audit disputes, and the outcome depends on the wisdom of both parties.

The China Securities Regulatory Commission (CSRC) said whether Chinese companies listed in the US are delisted in the future depends on the progress and results of the audit and regulatory cooperation between the two countries.

 

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CSRC chairman Yi Huiman and his counterpart, US Securities and Exchange Commission chair Gary Gensler, have held three virtual meetings since last August to discuss a resolution for the legacy issues in coordinated audits of companies.

China has also held multiple rounds of frank, professional and productive meetings with the Public Company Accounting Oversight Board, the statement said.

The process is smooth in general and will continue. Both sides are willing to solve the disagreements and problems. “But the outcome will depend on wisdom and the original will of both sides,” it said.

The statement came after US SEC chair Gary Gensler pushed back speculation of an imminent deal to be reached between the two sides that would avoid trading suspension of around 200 Chinese companies listed in the US.

The long-running Sino-US audit stand-off has put hundreds of billions of dollars of US investments in Chinese companies at stake.

Washington is demanding complete access to the audit papers for US-listed Chinese companies but Beijing bars foreign inspection of local accounting firms’ work.

In December, the US SEC finalised rules to delist Chinese companies under the Holding Foreign Companies Accountable Act (HFCAA), and said it had identified 273 companies that were at risk, without naming them.

By Thursday, 11 US-listed Chinese companies had been identified by the US regulator as carrying risks under the HFCAA.

“The US side has made a case that it is treating everybody equally with its Holding Foreign Companies Accountable Act. And it is becoming increasingly clear that China is unlikely to ask for an exception,” said Shen Meng, a director at Beijing-based boutique investment bank Chanson & Co.

Hong Kong shares of Baidu, among the latest batch of stocks facing delisting risks, were down around 4% in morning trade.

 

  • Reuters with additional editing by Jim Pollard

 

 

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Jim Pollard

Jim Pollard is an Australian journalist based in Thailand since 1999. He worked for News Ltd papers in Sydney, Perth, London and Melbourne before travelling through SE Asia in the late 90s. He was a senior editor at The Nation for 17+ years and has a family in Bangkok.

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