But it at least suggests Beijing still sees some value in links with America
Save time by listening to our audio articles as you multitaskSince 2011 the Public Company Accounting Oversight Board , an auditing governance body, has demanded that accounting firms auditing New York-listed Chinese companies open the companies’ books for inspection. These reviews were made all the more urgent by repeated instances of fraud by Chinese firms.
A law passed in America in 2020, the Holding Foreign Companies Accountable Act, gave auditors three years to comply before their Chinese clients were forcibly delisted. When in March the Securities and Exchange Commission, America’s market watchdog, published a list of firms slated for delisting, it caused the sharpest fall in American-traded Chinese stocks in more than a decade.
For their part, regulators in Beijing had sent a cold message to investors in America. A crackdown on Didi Global, a Chinese ride-hailing firm, just days after it listed in New York implied that the Chinese government cared little about the reputation of companies listed on foreign markets.and the China Securities Regulatory Commission comes as a welcome surprise.
Signing the deal may have been the easy part, however. Lawyers working on cross-border regulatory arrangements note that carrying it out will be fraught with risks. The statements released by theare contradictory in places. The Americans note that they will not need to go through Chinese authorities to access documents. There can be “no loopholes and no exceptions”, their statement says.
That might help explain why, even though the deal has been signed, the market is so far pricing in only a 50% chance of eventual success, according to analysts at Goldman Sachs, a bank. Agreements between China and America have a poor record when it comes to implementation. Analysts at Bernstein, a broker, reminded investors of another high-profile pact meant to patch up relations: “Remember the Trump phase one trade deal?” That agreement failed miserably.
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