BOAO – China’s watchdog for securities holds regular talks with U.S. regulators on audit cooperation and expects an agreement soon, a Chinese regulatory official said Thursday about a dispute that could lead to delistings of U.S. listed Chinese companies.
The comments of Fang Xinghai, Vice President of the China Securities Regulatory Commission (CSRC), represent the latest gesture from Beijing that it is willing to resolve the long-running dispute with Washington.
“Currently, we conduct basic negotiations via video link every two weeks to complete details,” Fang told a panel discussion at the annual Boao Asia Forum.
“I am very convinced that we will reach an agreement in the near future so that PCAOB can carry out inspections of Chinese auditing firms in China in a sensible way. This uncertainty will soon be removed and this will be good news for Chinese equities listed abroad. “
The Public Company Accounting Oversight Board (PCAOB), the U.S. audit regulator, requires full access to audit papers from Chinese companies listed in New York.
The request has so far been rejected by China for national security reasons – a standoff that could lead to some 270 Chinese companies being forced to delist from US stock exchanges by 2024.
On April 2, China released draft confidentiality rules that would potentially allow U.S. regulators access to such working papers through joint inspections or other forms of regulatory cooperation.
Meanwhile, the rules require Chinese companies to protect state secrets.
There were previous media reports indicating progress in the US-China negotiations, but US securities and audit authorities had pushed back on speculation about an impending agreement with China.
In March, the U.S. Securities and Exchange Commission (SEC) identified 11 U.S.-traded Chinese companies, including Baidu Inc and Yum China, that face delisting risks, and the list grows longer.
“Since a change of chair in both the SEC and the PCAOB,” the negotiations between the CSRC-led Chinese negotiating team and them have been very smooth, “Fang said Thursday.
He reiterated that “CSRC’s position is to support companies to list abroad, and support companies to choose markets where they want to list.” (Reporting by Kevin Yao; Writing by Samuel Shen; Editing by Toby Chopra and Alison Williams)