China in Talks with US to Prevent Delisting of Its Companies in the US

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Cho Hyun-ui] Chinese securities authorities are closely consulting with U.S. authorities ahead of the enforcement of laws related to the delisting of Chinese companies listed on U.S. stock markets.

According to Bloomberg and others on the 25th (local time), a representative of the China Securities Regulatory Commission (CSRC) said at a conference held in Hong Kong that day, "We are working very hard with U.S. authorities to resolve accounting supervision issues," adding, "Currently, communication is smooth and open."

He also added, "The delisting of Chinese companies is unfavorable for the companies themselves, global investors, and U.S.-China relations."

In December last year, during the previous Donald Trump administration, the U.S. introduced the "Holding Foreign Companies Accountable Act," which allows the delisting of foreign companies that fail to meet U.S. accounting audit standards from the stock market.

This law stipulates that foreign companies that fail to pass accounting audits by the Public Company Accounting Oversight Board (PCAOB) for three consecutive years will be delisted from U.S. stock markets. The U.S. Securities and Exchange Commission (SEC) is reportedly finalizing the implementation plan under this law.

The creation of this delisting law, which effectively targets Chinese listed companies, was partly due to the intensified U.S.-China conflicts during the Trump administration, but also because Chinese authorities were reluctant to hand over their companies' accounting data to foreign regulators citing national security reasons.

In 2019, China amended its Securities Law to explicitly prohibit domestic companies from voluntarily submitting accounting data to foreign authorities without government approval.

Foreign media reported, "Currently, the map on the PCAOB website shows China as the only country refusing the access rights necessary for PCAOB supervision."

At the conference, the Chinese securities authority representative also expressed support for Hong Kong's status as an international financial hub.

In response to the U.S. moves to delist Chinese companies, since last year, Chinese companies listed on U.S. stock markets have increasingly been conducting secondary listings on the Hong Kong Stock Exchange or even holding initial public offerings (IPOs) in Hong Kong.

This content was produced with the assistance of AI translation services.