Analysis: U.S., China Audit Agreement Not Yet a Done Deal, Lawyers Warn

There was much relief for investors in U.S.-listed Chinese firms after Beijing and Washington struck a long-pending audit deal, but legal experts and China watchers warn the two sides could still clash over how the accord is interpreted and implemented, Reuters reported. U.S. regulators have for more than a decade demanded access to audit papers of U.S.-listed Chinese companies, but Beijing has been reluctant to let U.S. regulators inspect its accounting firms, citing national security concerns. On Friday, however, the countries reached a landmark deal which appeared to give the United States everything it wanted: full access to China audit papers with no redactions for any reason; the right to take testimony from audit company staff in China and Hong Kong; and sole discretion to select which companies the United States inspects. Investors said the deal was a major boon for U.S.-listed Chinese companies, but share price gains were capped by a new round of risk-aversion on Monday, triggered by worries of an extended period of global interest rate rises. Read more.