A Short Lived Truce Between US and Cina on Accounting Rules

 

U.S.-China accounting deal will merely mark a short truce

 

U.S. accounting inspectors began reviewing the audit records of Alibaba Group Holding and other Chinese companies this week in Hong Kong under a deal reached last month to avert the ejection of some 260 stocks from New York markets.
 
But Andrew Collier believes the deal will not survive that long. "Both sides have few incentives to make more than a halfhearted effort to meet in the middle," notes the China analyst for emerging markets research provider GlobalSource Partners. "Both sides have preferred to remain vague on the actual details of the agreement."
 
While securities regulators in Beijing appear keen to make the agreement work, Collier argues that powerful security agencies with very different interests can be expected to step in if U.S. regulators demand data.
 
"China would like to take advantage of overseas capital, financial expertise and the market branding that U.S. listings offer," he says. "But it is not willing to sacrifice data protection or control over capital flows to enjoy these benefits."