US regulator says oversight of Chinese companies remains futile as authorities refuse American ‘principles and practice’
- Discussions are unlikely to be productive unless ‘Chinese authorities are willing to embrace certain principles,’ says US regulator
- US markets have increased exposure to companies with significant operations in China and passive American investors are bearing the brunt of the risks
A US regulator said on Thursday talks with China about improving oversight of US-listed Chinese companies will be futile until Chinese authorities accept fundamental US principles.
Over the past decade, “there have been near constant discussions with Chinese authorities,” said William Duhnke III, chairman of Public Company Accounting Oversight Board (PCAOB), the group that inspects the audits of the listed foreign companies.
“These efforts have failed to result in a viable model for cooperation because the Chinese authorities refused our principles and practice,” said Duhnke at a virtual round table organised by the US Securities and Exchange Commission (SEC) on Thursday to review risks posed by lack of oversight on foreign companies in emerging markets, including China.
“From our perspective, any further discussions about access are unlikely to be productive unless and until the Chinese authorities are willing to embrace certain principles that ensure our fundamental ability to accomplish our mission,” Duhnke added.
The round table, announced in May, was designed to hear the views of investors, market participants, regulators and industry experts about the risks of investing in emerging markets particularly China.