US Treasury Secretary Steven Mnuchin testifies with Jovita Carranza, Senate Small Business Administration Administrator during the Small Business and Entrepreneurship Sessions to examine the implementation of Title I of the CARES Act on Capitol Hill on June 10, 2020 in Washington, DC.
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Trump administration officials have urged the president to remove Chinese companies that trade on U.S. exchanges and fail to meet U.S. audit requirements by January 2022, the Insurance and Exchanges Commission and Treasury officials said Thursday.
The remarks came after President Donald Trump appointed a group of top advisers, including Treasury Secretary Steve Mnuchin and SEC Chairman Jay Clayton, to draft a report with recommendations to protect US investors from Chinese companies whose audit documents have been retained. long ago by American regulators.
It also comes amid growing pressure from Congress to crack down on Chinese companies that take advantage of U.S. capital markets but disregard U.S. rules faced by U.S. rivals.
“We are simply leveling the playing field, keeping Chinese firms listed in the US with the same standards as everyone else,”; a Treasury official told reporters in an informative call to the report.
The U.S. Senate unanimously passed legislation in May that could prevent some Chinese companies from listing their shares on U.S. exchanges unless they follow U.S. auditing standards and regulations.
‘Important first step’
Democratic Sen. Chris Van Hollen, who sponsored the bill, described the recommendations as “an important first step,” but said that “without the added teeth of our bill, this report alone does not meet the requirements needed to protect everyday investors.” American. “
The administration’s recommendations, if implemented through a SEC adjustment process, will give Chinese companies already listed in the United States by January 1, 2022, to ensure that the U.S. audit overseer, known as the PCAOB, has access to their audit documents.
They can also provide a “co-audit”, for example, conducted by a US parent company of the China-based subsidiary, in charge of auditing the Chinese firm. However, companies seeking to rank in the United States for the first time will have to agree immediately, officials said.
A State Department official told Reuters that the administration plans to soon scrap a 2013 agreement between U.S. and Chinese audit authorities to set up a process for the PCAOB to request documents in enforcement cases against Chinese auditors.
China said Friday that the two countries have “good co-operation” in monitoring publicly listed firms.
“The current situation is that some US monitoring authorities are failing to meet their obligations, and what they are doing is political manipulation – they are trying to force Chinese companies to get rid of US markets,” the spokesman said. Foreign Minister Wang Wenbin for a press conference.
China softened its tone in a subsequent statement, calling for a solution through dialogue.
The PCAOB has long complained about China’s failure to provide claims, giving it a glimpse into the audits of Chinese firms trading in US exchanges.
The report also recommends that greater disclosure be sought from issuers and registered risk funds to invest in China, as well as order more caution from index tracking funds and issue guidance to investment advisers regarding liabilities. investment confidence in China.
The moves come amid growing tensions between Washington and Beijing over China’s treatment of the coronavirus and its moves to curb freedoms in Hong Kong, among other issues.