Government media: China and the United States are working hard to resolve the audit dispute

The flags of China and the United States are shown printed on paper in this illustration taken on January 27, 2022. REUTERS/Dado Rovich/Illustration

SHANGHAI (Reuters) – Chinese regulators and their American counterparts are working hard to resolve an audit dispute affecting Chinese companies listed in the United States and want to achieve effective and sustainable cooperation as soon as possible, a state newspaper reported on Sunday.

Citing a source close to Chinese regulators, the official China Securities Journal reported that the China Securities Regulatory Commission (CSRC) heard opinions from some Chinese companies listed in the United States during an online meeting on Sunday.

“Both the Chinese and US regulators are fully aware of each other’s concerns, moving toward each other, and working hard to find solutions to the issue in order to achieve effective and sustainable cooperation as soon as possible,” the source was quoted as saying. .

“This is in the interest of the capital markets of both countries and global investors.”

The newspaper said recent talks with US regulators have been efficient, candid and professional.

The comments come days after the US public firm’s accounting regulator said recent media speculation about an imminent deal with China was “premature,” and it was unclear whether the Chinese government would grant the access required by the new US listing law. Read more

Washington demands full access to the books of Chinese companies listed in the United States, but Beijing is blocking foreign inspections of business papers from domestic accounting firms — a long-running audit dispute that puts hundreds of billions of dollars in American investment on the line. Read more

Hang Seng Technology Index (.HSTECH)which tracks some of China’s largest technology companies including Alibaba Group Holding Ltd (9988.HK) Baidu is you (9888.HK)jumped 3.6% Monday morning, compared to a 1.3% gain in the benchmark Hang Seng Index.

Statistically significant differences

But some analysts and investors remain skeptical that a solution can be found.

“There are significant differences between US and Chinese regulators,” Hao Hong, head of research at BOCOM International, wrote on Monday. “Many Chinese companies listed in the United States will eventually face delisting.”

He added that US regulators are requesting disclosure of the government’s interest in listed companies, as well as sensitive information and data, while the Chinese government “is tightening its control over many of China’s largest and most important companies.”

To avoid delisting risk, New York asset manager Krane Funds Advisors said earlier this month that the $4.9 billion KraneShare CSI China Internet ETF aims to convert all China-US Depository Receipts (ADRs) in its portfolio into Hong Kong stocks in the future. . months.

Chinese regulators have asked some US-listed companies in the country, including Alibaba, Baidu and JD.com, to prepare for more audit disclosures as Beijing ramps up efforts to ensure they remain listed in New York, Reuters reported last week. Read more

The Financial Times and Bloomberg News also reported this month that China’s securities watchdog is considering a proposal that would allow US regulators to examine auditors’ work papers for some companies as soon as this year.

CSRC has warned market participants against blind faith in speculation by some media outlets with little knowledge of the details and direction of the talks, as such reports have caused unnecessary disruptions to market expectations, China Securities Journal reported on Sunday.

Reporting by Shanghai Newsroom Editing by Raisa Kasulowski and Simon Cameron Moore

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