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Five Chinese firms vow to delist from US markets amid long running audit dispute

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Five Chinese state-owned companies have said they will pull themselves off the New York stock exchange amid long-running clashes between Beijing and Washington over audit standards.

The five Chinese firms have said they will delist from the Wall Street market after coming under scrutiny over US regulators claims they have failed to meet US audit standards.

The plans to delist come amid longstanding concerns from the US around a lack of transparency surrounding Chinese and Hong Kong firms.  

The clashes came to ahead in 2020 after former US president Donald Trump signed the Holding Foreign Companies Accountable Act (HFCAA), which requires overseas firms to allow auditors from the US Public Company Accounting Oversight Board (PCAOB) access to their accounts.

China has for the most resisted moves to allow foreign regulators access to Chinese company data due to national security concerns.

Those companies that fail to allow access to the PCAOB auditors could be banned from US stock markets, if they fail to meet the audit body’s requirements by the 2023 deadline.

The five companies include China’s state-owned oil companies Sinopec and Petrochina, petrochemicals producer Sinopec Shanghai Petrochemical Co, insurance company China Life Insurance, and metals manufacturer Aluminum Corporation of China.

Speaking at a press conference China Securities Regulation Committee (CSRC) official said delistings are “common” as he claimed the firms have “strictly observed relevant US rules and regulations” since first being listed on US markets.

“The delisting plan will not jeopardize these companies’ fund-raising ability through domestic and overseas capital markets,” the CSRC official said.

“We will continue to communicate and cooperate with relevant overseas regulators to jointly protect the legitimate rights and interests of issuers and investors,” the official added.

The delisting plans come amid heightened tensions between China and the US following Nancy Pelosi’s visit to Taiwan.