Vice chairman of the China Securities Regulatory Commission, Fang Xinghai, on Apr 21, said that he expected an agreement soon with the U.S. over the auditing dispute.
He said he was very confident that China and the U.S. would reach a deal shortly so that the U.S. could conduct checks on Chinese accounting firms in China reasonably.
Fang added that this would be good news for Chinese stocks listed overseas.
On the same day, the U.S. added 17 Chinese firms to the potential delisting list over the next three years. The list now consists of 40 Chinese firms.
The move led to investors dumping Chinese tech stocks on Friday.
Reuters cited Yuan Yuwei, hedge fund manager at Water Wisdom Asset Management, saying China and the U.S. can not reach a deal anytime soon due to geopolitical tensions.
Earlier this month, Reuters reported that China had amended a drafted law letting U.S. regulators access U.S.-listed Chinese companies’ accounting papers.
Under the Holding Foreign Companies Accountable Act, the U.S. regulator has permission to audit documents of the U.S.-listed Chinese firms. But Chinese companies don’t follow the U.S. policy because China wants to protect state secrets.
This law allows U.S. regulators to delist Chinese companies from U.S. exchanges. In case American regulators cannot review the firm’s audits for three consecutive years.