Without much public fanfare or even awareness except in the gloomy world of bean-counting accountants, China and the United States have embarked on yet another business collision course. Patrick Chovanec, the respected Tsinghua University-based American academic asks whether they can avert an "accounting Armageddon".
US securities regulators have started moving towards the "nuclear option" of forcibly delisting every Chinese company on a US stock exchange.
That would include Sinopec, Sina.com , China Life and China Unicom, among others.
Paul Gillis, a professor of accounting at Peking University and author of the China Accounting Blog, also sees the risk of conflict growing, and puts the odds of wholesale Chinese corporate delistings from the US at 80 per cent, whereas in June he thought the chances were only 20 per cent.
He believes that for China the issue involves the sensitive red line of "national sovereignty". There is potential room for a compromise solution, but it would involve the political and securities regulators in both countries behaving in a mature and global-minded way.
This is not a footnote in the accounts but a big deal that goes to the heart of the role that China would, could and should play in a globalising world.
US authorities cannot afford to put on a holier-than-thou pout. In accounting standards, as in other business and political matters, the US has a history of wanting to set its own rules for everyone else.
At the start of this month the US Securities and Exchange Commission issued an order - with the prosaic number 2012/34-68335 - which began administrative proceedings against the Chinese member firms of the Big Four global accounting firms (Deloitte Touche Tohmatsu, Ernst & Young Hua Ming, KPMG Huazhen, and PricewaterhouseCoopers Zhong Tian) plus BDO China Dahua.
All five accounting firms are registered with the Public Company Accounting Oversight Board (PCAOB), the US accounting watchdog, as the auditors of US-listed Chinese companies.
The order notes that the SEC has begun fraud investigations against nine US-listed companies whose main operations are in China. These were not named but are audit clients of the five firms listed by the SEC.
In each case, the order continued, the SEC had requested "all audit work papers and all other documents related to any audit work or interim reviews", but the audit firms, "informed the Commission that [they] will not produce the documents … because, among other things, [they] interpret the law of the People's Republic of China as prohibiting [them] from doing so."
The SEC terms the behaviour of the five audit firms as "wilful" and is seeking a ruling from a judge as to whether the Chinese auditors should be censured or denied the right to appear and practice before the SEC.
It is easy to see where the dispute is heading. If the US authorities sanction the audit firms by withdrawing or suspending their authority to perform audits for US-listed companies, then the Chinese companies would effectively have to delist.
Chovanec notes that there is a history of suspicion and bad blood concerning some Chinese companies listed on US markets. In part this was sparked when muckraking US researchers accused some Chinese companies - a number of which had avoided the scrutiny of an initial public offering by arranging reverse takeovers with already-listed concerns - of grossly exaggerating their real assets and business performance.
The SEC's fraud investigations into the Chinese companies were blocked by the China Securities Regulatory Commission, which claimed that audit materials on Chinese companies fell under the State Secrets Law.
When the SEC subpoenaed Deloitte for records of Longtop Financial, Deloitte refused, stating that the CSRC had ordered it not to turn over the papers. Deloitte said that if it went against the Chinese authorities, it might be dissolved and its partners jailed for life.
Chovanec notes that the requirement of the Sarbanes-Oxley Act that the PCAOB must conduct inspections of audit firms registered with it adds another damaging complication. Chinese authorities have so far refused permission for the US watchdog to conduct inspections in China.
Although it will take months before a judge issues a ruling on the SEC charges against the Chinese audit firms, Thomas Shoesmith, a partner at the prominent Pillsbury law firm, noted that the SEC proceedings were "certain to send a chill through an already chilled market".
Possible repercussions would be far wider than mere delisting of Chinese companies from US markets. Continuing disagreement would affect the international ambitions of China Inc.
But Beijing will no doubt be quick to play tit-for-tat and make life uncomfortable for American multinational companies operating in China.