Chinese Regulators Seek to Soothe Nervous Markets as Domestic Firms Delist in U.S.

Reports that Chinese regulators are pushing for so-called variable interest entities to drop their listings in the United States are a “complete misreading and misinterpretation” of the regulations, the China Securities Regulatory Commission (CSRC) said in a statement on Sunday. The comments followed a sell-off of offshore listed Chinese stocks after Didi Global announced its plan to delist from the New York Stock Exchange, choosing to raise capital in Hong Kong instead.

The CSRC spokesperson said that it maintains an open attitude as to where companies seek to raise funds and respects their choices. Some domestic enterprises are actively communicating with domestic and foreign regulators to promote listing in the U.S., the CSRC noted.

With regard to Sino-U.S. audit supervision cooperation, CSRC said that it has recently had frank and constructive communications with regulatory agencies including SEC and PCAOB on some key issues. As long as the regulatory authorities of both sides continue to conduct dialogue based on the principles of mutual respect, rationality and pragmatism, they will be able to find a mutually acceptable path for cooperation.

In fact, China and the U.S. have been cooperating in the field of auditing and supervision of China Concepts Stock, and have explored effective methods through pilots, laying a good foundation for cooperation between the two sides.

The spokesperson pointed out that relevant regulatory authorities in China have issued a series of policies and measures, the main purpose of which is to regulate monopolistic behavior, protect the rights and interests of small- and medium-sized enterprises, promote data security and personal information security, and to prevent the disorderly expansion of capital.

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In view of these new problems and challenges, regulatory authorities of various countries are also trying to take different measures to promote the healthier and more sustainable development of the industry. Therefore, Beijing’s recent policy moves were apparently not aimed at specific industries or private firms, and were not necessarily linked to companies seeking to list in overseas markets.