US ‘playing the tactic of maximum pressure’ ahead of reported auditing paper inspection in HKSAR: analysts
Published: Sep 16, 2022 05:29 PM
Pedestrians walk past the New York Stock Exchange in New York, the United States. File Photo:Xinhua

Pedestrians walk past the New York Stock Exchange in New York, the United States. File Photo:Xinhua

US Securities and Exchange Commission (SEC) Chair Gary Gensler reportedly voiced support on proposals to shorten the timeframe for US-listed Chinese firms to comply with audit request to two years, from the three years under the current law. 

Market observers said the move, coming ahead of a reported US inspection on auditing paper in Hong Kong next week, shows that Washington's attempts to continue hijacking the interests of listed Chinese companies and play to the tactic of maximum pressure to render concessions from Beijing. They urged the US not to compromise a hard-achieved cooperative environment between securities regulators of both sides after the preliminary auditing agreement was reached in August.

According to a Bloomberg report, Gensler expressed support to the reduction of timeframe at a hearing on Thursday (US time) and he said that's because "it will continue to have the right leverage." 

He noted that the US regulators will visit Hong Kong next week, and start reviewing the auditing papers of Chinese companies traded on the New York stock bourse. If the visit takes place, it will be a new development under an auditing cooperation agreement reached between China and the US last month, which partially helps to clear delisting clouds hanging over 280 Chinese companies listed in the US.

"As some details of the agreement are still subject to negotiation, we are seeing a familiar playbook from the US: to threaten with sticks and put maximum strains on the Chinese side first, in illusion that these could lead to an advantageous position at the negotiation table," Gao Lingyun, an expert from the Chinese Academy of Social Sciences in Beijing, told the Global Times on Friday.

Analysts said Gensler's comments, though highly likely only a threat, has cast clouds over the results of the reported inspection next week - which the global investors are closely updating with - and created uncertainties in an already volatile global capital market.

Under the initial bilateral agreement, the US needs to acquire documents including audit papers through Chinese regulators, and conduct interviews and inquiries with the participation and assistance of Chinese authorities. The US cannot enter the territory alone, or conduct investigations and obtain evidence against Chinese accounting firms. 

To date, the SEC has added group after group of US-traded Chinese companies to a register for possible delisting due in 2024 under current US law. As of August 7, a total of 162 US-traded Chinese companies, out of a possible 280, had been put on the list. 

Global Times