Beijing and Washington on Friday took a major step toward ending a dispute that had threatened to drive Chinese listed companies such as Alibaba off the U.S. stock market, signing a pact that allows U.S. regulators to audit accounting firms in China and the Hong Kong.
US regulators have been demanding access to audit documents of US-listed Chinese companies for more than a decade, but Beijing has been unwilling to let overseas regulators inspect its accounting firms, citing national security concerns.
The deal marks a thaw in US-China relations and is a huge relief for hundreds of Chinese companies, their investors and US stock markets, giving China a chance to retain access to the world’s largest capital markets.
Otherwise, about 200 Chinese companies could be barred from US stock exchanges, US Securities and Exchange Commission (SEC) chairman Gary Gensler said.
In announcing the deal, US officials warned that it was just a first step and that their view of China’s compliance would be determined by whether it would be able to conduct its inspections unhindered, as stipulated in the deal.
Anywaythe Public Company Accounting Oversight Board (PCAOB), which oversees audits of US-listed companies, said it was the most detailed and regulatory agreement the regulator has ever reached with China.
The China Securities Regulatory Commission (CSRC) said the deal was an important step towards addressing the issue of control.
Source: Capital
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