What is next in the China-US trade war? - Arthur Kroeber

Arthur Kroeber

China is running out of steam in putting tariffs in US imports, but certainly not running out of options to fight the ongoing trade war, says economist Arthur Kroeber, author of China's Economy: What Everyone Needs to Know, to the South China Morning Post.

The South China Morning Post:

Arthur Kroeber, research head and co-founder of the financial services company Gavekal, said Chinese leaders’ previous tactics – including “a few buying missions” to Washington, a red-carpet welcome for Trump in Beijing and an attempt to cut a deal with Treasury Secretary Steven Mnuchin – had all failed. 

“China will respond with its own tariffs, start squeezing US companies where it can, and dig in for a war of attrition,” Kroeber said.

More in the South China Morning Post.

Arthur Kroeber is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.

Are you looking for more experts on the ongoing trade war at the China Speakers Bureau? Do check out this list.

Expected: crackdown on smaller CPA firms - Paul Gillis

Paul Gillis

 New rules apply to foreign CPA firms in China since July 1, and will rely on the cooperation of China´s regulators. The big four might not have much trouble, writes accounting professor Paul Gillis at his website. But the smaller foreign CPA firms might be heading for a hard time.

Paul Gillis:

I believe the real crackdown to come is over the US listed Chinese companies that are audited by small US based accounting firms. Most of these companies came to market through reverse mergers and trade thinly, if at all, on over-the-counter boards. These companies have had a high incidence of fraud and have embarrassed Chinese regulators who have no authority over them. After the NYSE and NASDAQ cracked down on reverse mergers by requiring a seasoning period before listing, the reverse merger market for Chinese companies in the U.S. died, replaced by China’s National Equities Exchange and Quotations(NEEQ – China’s third board). NEEQ has listed over 2,000 small Chinese companies with an average market cap of under $75 million.

Those US CPA firms with a significant client base in China are going to have more serious problems complying with these rules. Some of these firms have set up consulting practices in the form of wholly foreign owned enterprises (WFOEs) that do the audit work on the mainland. Such WOFEs are clearly violating Chinese law by doing auditing, and since most have not registered with the PCAOB, they are also violating US laws. Regulators have looked the other way, until now, perhaps. 

The audit committee of any firm audited by an overseas CPA firms should seek written assurance from its auditor that it will be able to comply with the new rules. The SEC should demand that companies disclose the material risk that the auditor may be unable to complete the audit if the auditor is not in compliance with the new rules. The Big Four all have significant mainland affiliates and should not face any difficulties in complying with the new rules.

More at the ChinaAccountingBlog.

Paul Gillis is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers´ request form.

Are you looking for more financial experts at the China Speakers Bureau? Do check out this list.