China, US work hard to find solution to audit dispute – state media

The Chinese and American flags are printed on paper in this illustration taken January 27, 2022. REUTERS/Dado Ruvic/Illustration

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SHANGHAI, March 27 (Reuters) – Chinese regulators and their U.S. counterparts are working hard to resolve an audit dispute over U.S.-listed Chinese companies and want to reach effective and lasting cooperation as soon as possible, an official 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 the views of some U.S.-listed Chinese companies in an online meeting on Sunday.

“The Chinese and American regulators are fully aware of each other’s concerns, and are approaching each other, and are working hard to find solutions to the problem in order to achieve effective and lasting cooperation as soon as possible,” the source said. .

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

The CSRC said recent discussions with U.S. regulators have been efficient, frank and professional, the newspaper said.

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

Washington demands full access to books of Chinese companies listed in the US, but Beijing bans foreign inspection of local accounting firms’ working papers – a long-simmering audit dispute involving hundreds of billions dollars of US investment. Read more

The Hang Seng Tech Index (.HSTECH), which tracks some of China’s biggest tech companies including Alibaba Group Holding Ltd (9988.HK) and Baidu Inc (9888.HK), jumped 3.6% on Monday morning, against a 1.3% gain in the benchmark Hang Seng index.

SIGNIFICANT DIFFERENCES

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

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

US regulators require disclosure of government interest in listed companies, as well as sensitive information and data, while the Chinese government “has tightened its control over many of China’s largest and most important companies “, he added.

To avoid delisting risk, New York-based asset manager Krane Funds Advisors said earlier this month that its $4.9 billion KraneShare CSI China Internet ETF aims to convert all certificates of Chinese American deposit (ADR) of its portfolio in their Hong Kong shares in the coming months. month.

Chinese regulators have told some of the country’s US-listed companies, including Alibaba, Baidu and JD.com, to prepare for more audit disclosures as Beijing steps up efforts to ensure they stay 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 evaluating a proposal that would allow U.S. regulators to inspect the working papers of some companies’ auditors as early as this year.

The CSRC has warned market participants not to blindly believe speculation from some media unfamiliar with the details and direction of the talks, as such reports have caused unnecessary disruption to market expectations, the China reported on Sunday. SecuritiesJournal.

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Shanghai Newsroom Reporting Editing by Raissa Kasolowsky and Simon Cameron-Moore

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