Chinese authorities have issued pointed responses to recent developments in US capital markets, including the Securities and Exchange Commission’s (SEC) implementation of heightened disclosure requirements for Chinese companies, and the decision of ride-sharing giant DiDi Chuxing to decamp from a US to a Hong Kong listing.
On 2 December the SEC committed to the implementation of a law that requires Chinese companies and auditors to open their books to scrutiny from the US Public Company Accounting Oversight Board (PCAOB).
China had previously refused to allow PCAOB to review audits of Chinese companies that had listed in the US, including Alibaba and Baidu.
The following day DiDi Chuxing announced via its official Weibo account that it would delist from the New York Stock Exchange, and had commenced preparations for a listing in Hong Kong, less than six months after the ride-hailing giant made its IPO in the US.
China’s foreign ministry was highly critical of SEC’s recent decision.
“The relevant actions of the US are another specific action of political pressure against Chinese enterprises, as well as another concrete expression of US pressure and containment of Chinese development,” said foreign ministry spokesperson Zhao Lijian (赵立坚).
“We express our firm opposition…China has always believed that in today’s highly globalised capital markets, the right path to resolving problems is via strengthening regulatory cooperation, protecting the lawful rights and interests of investors, and strengthening dialogue and cooperation.
“The politicisation of securities regulation hurts others and harms one’s self, and will cause US investors to lose opportunities to invest in some of the world’s most rapidly growing companies.”
The China Securities Regulatory Commission (CSRC) said that DiDi’s decision to delist in America should not be interpreted as a response to changes on the part of Chinese authorities, while stressing its intention to continue cooperating with US regulators.
“CSRC has always held an open attitude towards enterprises choosing to list overseas, and fully respects the lawful and compliant sovereign choice of listing location by enterprises,” said a CSRC official on 5 December.
“Recently, certain media have reported that Chinese regulatory authorities will ban the use of variable interest entities (VIE’s) from overseas listing, prompting Chinese enterprises listed in the US to withdraw…this is a complete misinterpretation and misreading.”
CSRC said that it was working with US regulators including SEC and PCAOB to resolve disagreements in relation to the listing of Chinese enterprises.
“We believe that as long as the regulatory agencies of both sides continue to engage in dialogue and negotiation while upholding the principles of mutual respect, rationality and professional trust, we will definitely be able to find a cooperative path that is acceptable to both parties.”