A preliminary agreement has been reached between the US and China that will allow American regulators to inspect the auditing records of Chinese companies listed in the US.
The US Public Company Accounting Oversight Board will be able to see complete audit work papers without any redactions and inspectors will have direct access to take testimony from all personnel working at the auditing firms according to a statement released by Securities and Exchange Commissioner Gary Gensler.
Inspectors need to be on the ground by mid-September if they are going to be able to complete their work by the end of the year.
Roughly 200 China-based companies with shares listed in the US will face prohibition of trading in their shares if the inspectors are not allowed to carry out their work.
For more than a decade, China and the US have been at odds over inspection procedures. The records of local accounting firms can't be inspected by foreign regulators because of national security concerns.
After news of the preliminary agreement, the shares of Chinese companies on the US market rose, but then fell or both. The stock market fell after a speech by Powell. The online retailer's gain on the New York Stock Exchange was trimmed to. The advance of e-commerce companyJD.com was trimmed to 3%.
More than 50 other countries have met the requirements for auditing, but China and Hong Kong have not.
The PCAOB signed a preliminary agreement with the CSRC.
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