CHINA WATCHChina Said to Ask Domestic Firms to Shun Big Four Accountants
In a possible sign that the so-called “decoupling” of the U.S. and Chinese economies is continuing, a recent media report said that the Chinese government has urged large state-owned enterprises (SOEs) to cease using the world’s biggest global accounting firms to audit their onshore businesses.
In a possible sign that the so-called “decoupling” of the U.S. and Chinese economies is continuing, a recent media report said that the Chinese government has urged large state-owned enterprises (SOEs) to cease using the world’s biggest global accounting firms to audit their onshore businesses.
The report, published last week by Bloomberg, cites people familiar with communications between the Chinese Ministry of Finance and large SOEs, in which the ministry encouraged the companies to allow their existing contracts with Western firms to lapse when they expire, and to replace them with accounting firms from mainland China or Hong Kong.
According to the report, the Chinese government’s focus is on the so-called “Big Four” accounting firms, PricewaterhouseCoopers (PwC), Ernst & Young, KPMG and Deloitte. All four firms have headquarters in London but are instrumental in helping many global companies comply with the audit requirements U.S. authorities require of public firms with shares listed on U.S. stock exchanges.
There has long been tension between the Chinese government, which highly values the security of information held by its large companies, and Western financial services regulators, who prize the kind of transparency that allows investors to make informed decisions about companies seeking to raise money in the capital markets.
Chinese authorities have, for years, been trying to strike a balance between the protection of Chinese firms’ information and the access to international investment capital that comes with exposure on stock markets like those in the U.S.
China Disputes Report
The Chinese government, through the state-controlled publication the Global Times, has disputed the Bloomberg report. A recent news story in the Global Times said that Big Four firms “have won bids to provide accounting services to China’s state-owned enterprises in recent days.”
The Global Times cited a decision in February by state-run insurance firm China Taiping to hire PwC to provide its audits from 2023-2027, and another recent decision by Liaoshen Bank, closely connected to the state-owned Liaoning Financial Holding Group, to hire KPMG. Neither report could be independently verified.
The Global Times article, published under a “GT Staff reporters” byline, did not quote any government officials by name.
A request for comment emailed by VOA to the Chinese Embassy in Washington was not answered in time for publication.
An Uneven Pattern
In recent years, Beijing has taken a number of measures to curtail the outside world’s access to information about Chinese companies.
