US-China financial regulatory talks to resume between Wall Street, Beijing
- Wall Street group working outside US government plans discussions with high-level Chinese officials on market access, regulation
- Agenda to include China opening up its markets and inspections of its companies’ financial audits by US regulator
The US and China are grappling with protracted stand-offs on issues such as market access, data security and international stock listings. China’s most recent crackdown on a number of its own companies burned international investors, further puzzling the US business community, which is seeking more clarity on the recent moves from Beijing.
John Thornton, the chairman of Barrick Gold and a Goldman Sachs veteran, is one of the chairs of the group, dubbed the China-US Financial Round Table. It had been put together with the support of senior Chinese officials and co-chaired by former central bank governor Zhou Xiaochuan.
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Thornton is in Beijing meeting Chinese authorities including Vice-Premier Liu He and China Securities Regulatory Commission (CSRC) vice-chairman Fang Xinghai, two people said, asking not to be identified because they were not authorised to discuss the matter. The CSRC did not respond to a request for comment, while the foreign ministry deferred questions to other relevant departments.
Wall Street is in a race to tap one of the biggest opportunities in finance as China opens up the industry there. The country scrapped foreign ownership limits in April last year, allowing companies to run their own money-management units and investment-banking operations.
At stake is a piece of China’s US$54 trillion financial-services market and as much as US$30 trillion in overall fund assets to be managed within three years. For its part, China is trying to introduce fresh blood into its finance industry as it reforms its pension system and tries to drive household wealth into long-term investments beyond stocks and property. Foreign companies could play a key role in helping the country build a more mature market.
Past meetings have drawn representatives with ties to heavyweights of US finance, including Blackstone, Goldman Sachs, JPMorgan Chase and Morgan Stanley. The delegation last met in October. At the time they had resolved to try to mitigate political risk that threatened their access to the world’s largest market outside the US.
Tensions with the US remain high. Securities and Exchange Commission chairman Gary Gensler on Tuesday warned hundreds of Chinese companies that have raised money in US markets that they risk having their shares delisted if they do not submit to increased scrutiny. Gensler pledged to strictly enforce a three-year deadline that requires the firms to permit inspections of their financial audits, implementing a mandate from Congress.
Despite this, China has been opening its financial markets more fully to Wall Street giants such as Goldman Sachs and BlackRock, counting on them to provide fresh investments and foster a more competitive local investment-banking and mutual fund industry.
China this week also sent its strongest signal yet that it was serious about resolving an impasse with the US over access to its companies’ books.
The State Council, China’s top government body, on Monday issued guidelines saying it would boost cross-border accounting cooperation, while also safeguarding its information security. That came on the heels of a statement from the nation’s securities regulator, which said it would work on enhancing conditions for cooperation with the US on company audits during the second half of the year.