The chairman of CSRC Yi Huiman called for greater collaboration with the US Public Company Accounting Oversight Board (PCAOB) and Securities and Exchange Commission (SEC), as reported by Reuters on June 22, citing data from the Caixin interview. Specifically, Yi pledged to continue opening up, as well as proposing more joint investigations and law enforcement mechanisms with the US on financial fraud. Moreover, Yi noted that the Luckin Coffee [LK:US] scandal is not representative of all Chinese firms aiming to list in the US. The PCAOB has not yet commented on the issue.
Previously in 2009, Chinese authorities announced that foreign regulators have to seek approval from Chinese authorities, such as CSRC, prior to inspecting financial documents. As such, although foreign firms listed in the US have to comply with US regulations, the different jurisdiction allows firms to bypass inspections from the PCAOB and SEC. However in early June this year, US President Donald Trump issued a Memorandum on Protecting United States Investors From Significant Risks from Chinese Companies, giving US financial regulators a 60-day period to submit a report on dealing with China. Along with the Holding Foreign Companies Accountable Act approved by the US Senate on May 20, the 169 Mainland and 76 Hong Kong-based firms currently listed in the US may be jeopardized and face delisting. In response, US-listed Chinese firms are mulling over secondary listings elsewhere. For instance, NetEase [NTES:US] raised HKD21.09bn via a secondary listing on the Hong Kong Exchanges & Clearing [0388:HK] on June 11.