China’s regulator seeks to avoid US delistings of Chinese companies

Chinese authorities are working with US counterparts to prevent Chinese companies from being delisted from US stock exchanges, a Chinese government official said on Thursday as a long-running dispute over audit standards continues to rumble.

U.S. authorities are on track to kick foreign companies off U.S. stock exchanges if their audits do not live up to U.S. standards.

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The Public Company Accounting Oversight Board (PCAOB) and U.S. policy makers have long complained about the lack of access to audit papers for U.S. listed Chinese companies. Citing national security concerns, Chinese authorities have been reluctant to allow overseas regulators to inspect working papers from local audit firms.

“We do not believe that delisting Chinese companies from the US market is a good thing either for companies, for global investors or for Sino-US relations,” said Shen Bing, director general of the China Securities Regulatory Commission’s Department of International Affairs. told a conference in Hong Kong.

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“We are working very hard to resolve the audit issue with U.S. counterparties, communication is currently smooth and open. There is a risk of delisting these companies, but we are working very hard to prevent that from happening,” he added.

In December 2020, during the final weeks of his administration, President Donald Trump signed a law aimed at removing foreign companies from US stock exchanges if they did not comply with US auditing standards for three years in a row.

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The legislation was implemented by the PCAOB in September. A map on the organization’s website showed China as the only jurisdiction that denied the PCAOB “necessary access to oversight.”

(Reporting by Scott Murcoch; Writing by Alun John; Editing by Muralikumar Anantharaman & Simon Cameron-Moore)

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