Sino-US cross-border regulatory cooperation has reached an important milestone. On Friday, the China Securities Regulatory Commission and the Ministry of Finance signed an audit oversight cooperation agreement with the US Public Enterprise Accounting Supervisory Board, to advance relevant cooperation. in a close future. Some US media were eager to report the news ahead of time, and Chinese stocks in the US market surged in response. This provided a useful side note to our understanding of the basic logic of China-US relations, as well as the real attitude of the market and public opinion on bilateral relations.
There have been longstanding disputes between Beijing and Washington over audit oversight of Chinese companies listed on US exchanges. The U.S. Holding Foreign Companies Accountable Act (HFCAA) was signed into law by former U.S. President Donald Trump at the end of 2020, which directly sparked a discussion on “Chinese stocks listed in the U.S. could seek delisting from the market. American”.
Washington has used this law for two years to bully Chinese stocks listed in the United States with a “delisting schedule”. In particular, some in the United States who have sought to “decouple from China” have politicized capital market regulation and even felt like pushing for financial decoupling between the two countries. Moreover, they have smeared many Beijing measures from time to time. By the end of July, the U.S. Securities and Exchange Commission had placed 159 China Concept Stocks on its delisting watchlist, according to the HFCAA.
It is clear that such a trend will lead to a lose-lose situation if not dealt with in advance. In recent decades, along with economic globalization, a large number of Chinese companies have started trading on US stock exchanges, expanding their funding channels and providing US investors with more investment opportunities.
Chinese enterprises listed in the United States have become an essential vector of economic exchanges between the two countries, as well as the convergence and inseparability of the interests of the two parties. In March, 261 Chinese companies were listed in the United States, with a total market capitalization of about $1.3 trillion, of which about $200 billion was held by US institutional investors. Once Chinese stocks are forced to delist from the US market, China will certainly not be the only one whose interests will be threatened. The responsibility and wisdom of Chinese and American regulators are demonstrated by the fact that the two parties were able to negotiate and find a rational and pragmatic solution.
At the same time, it again shows that it is normal for China and the United States to have differences and disagreements, which should not be an excuse for the two countries to move towards a large-scale confrontation. ladder. It is possible for Beijing and Washington to find loopholes, talk to each other and work things out as they should, provided they have an objective, pragmatic and mutually respectful attitude. This is in accordance with the law and the will of the peoples of both countries.
It is also reasonable that Beijing and Washington made some adjustment during the consultations to finalize the resolution of the problem. China has consistently stressed that it respects foreign regulators’ efforts to strengthen supervision of accounting firms to improve the quality of listed companies’ financial reporting, but opposes the poor practice of some forces politicizing securities regulation. movables.
At the same time, China has taken the initiative to consolidate the responsibility of listed companies in their information security through a series of laws and regulations, aimed at eliminating risks that should not have appeared first. venue. It’s like opening the windows gradually after installing the railings. It effectively balances openness and security: not only does it meet the need for regulation, but it also prevents Chinese companies from “running naked” and endangering national security.
In addition, the fact that China and the United States have reached a cooperation agreement on audit oversight provides a useful lesson for current bilateral relations – the two countries can reach a solution that addresses the concerns of each other on certain critical and sensitive issues, as long as they adhere to the principle of reciprocity and mutual benefit. It should be noted that in this cooperation, the United States should strengthen business supervision, while China should maintain national security. It is commendable that the concerns of both parties have been understood and respected by each other, and that their needs have been met through judicious arrangements. It is a symbolic case which also deserves a good understanding of those who, in the United States, abuse the concept of “national security”.
Maintaining the listing of Chinese companies in the United States benefits investors, listed companies, as well as China and the United States. It is a win-win institutional arrangement. The Chinese side has always been clear on this arrangement, and its efforts are visible and tangible.
The development of the situation also proves China’s judgment. Some people with ulterior motives had previously blamed China-US friction on Beijing, which is against the facts and shameful. China has responded to all these distortions and slanders with practical actions. It also sent a clear signal to all types of companies: China strongly supports companies that choose the listing destination according to their own judgment. China’s determination to develop a high level of openness will not change, nor will our efforts to actively integrate into the global market. China will open its doors wider and wider.