Beijing plans strategy to avoid US market cut: report

China is reportedly preparing a plan to prevent Chinese companies from being delisted from US financial markets.

The strategy is to sort companies into groups based on the sensitivity of the data they hold, according to the Financial Times.

It’s an effort to bring the companies into compliance with US rules that require public companies to allow regulators to inspect their audit files.

A logo of Alibaba Group is depicted at its headquarters in Hangzhou, Zhejiang Province, China. (REUTERS/Stringer/File Photo/Reuters Photos)

The three categories would be divided according to non-sensitive data, those containing sensitive data, and others containing “secret” data, which should be removed from the list.

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The move would be a concession from Beijing to remove hurdles, giving the US full access to audits in April.

KFC location part of YUM China

A Chinese man walks past a KFC restaurant in Xiamen, southeastern China’s Fujian province. (Reuters Marketplace / Reuters Photos)

Prior to this, China amended a rule that curbed data-sharing practices of foreign companies.

This plan comes after months of stalled talks between Beijing and Washington over US demands that Chinese companies and their auditors provide detailed audit documents or be delisted by 2024.

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The delisting may involve several major Chinese companies, including tech group Alibaba, fast food company Yum China and social media site Weibo.

Exterior view of the NYSE

Without compliance, US-listed Chinese companies could be delisted from trading on the New York Stock Exchange. (FBN)

The China Securities Regulatory Commission has not commented on the FT.

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US officials are skeptical that Chinese companies will meet the standards required under the Holding Foreign Companies Accountable Act 2020, which required Chinese and Hong Kong companies to open their audit files.

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