A Chinese regulatory official said on Thursday that Chinese authorities are working with US counterparts to prevent Chinese companies from being delisted from US stock exchanges, as a long-running dispute over auditing standards rages on.
Authorities in the United States are considering delisting foreign companies from American stock exchanges if their audits fail to meet U.S. standards.
The Public Company Accounting Oversight Board (PCAOB) and US policymakers have long expressed concern about a lack of access to audit working papers for US-listed Chinese companies. Chinese authorities have been hesitant to allow foreign regulators to inspect working papers from local accounting firms, citing national security concerns.
"We don’t think that delisting of Chinese firms from the US market is a good thing either for the companies, for global investors or Chinese-US relations," Shen Bing, director general of the China Securities Regulatory Commission's department of international affairs, told a conference in Hong Kong. "We are working very hard to resolve the auditing issue with U.S. counterparts, the communication is currently smooth and open. There is a risk of delisting of these companies but we are working very hard to prevent it from happening," he added.
President Donald Trump signed legislation in December 2020, during the final weeks of his presidency, that would bar foreign companies from trading on U.S. exchanges if they failed to meet American auditing standards for three years in a row.
According to a map on the PCAOB's website, China is the only jurisdiction that denies the PCAOB "necessary access to conduct oversight."
Last week, the Hong Kong stock exchange confirmed that rule changes would be implemented to make it easier for overseas-listed Chinese companies to conduct secondary listings and for companies to convert a Hong Kong secondary listing to a primary listing.