China not honoring its agreements.
Is China going to get a reputation for not honoring its agreements when it doesn't suit them? The PCAOB is responsible for ensuring the quality of audits of companies listed on US exchanges, not Chinese exchanges. China knew the rules when they began listing on US exchanges because it was advantageous.
Should companies listed on Chinese exchanges with operations abroad be barred from producing audit work papers involving their US business activities for example, because of "state secrets"?
What kind of business could a company be involved in on foreign soil involving state secrets? Secret recipes? Surely all of its transactions would be monitored by the host governments. Now when the company, and the host country have the same nationality, are we to believe the company was allowed to export state secrets without host country knowledge? With no punishments? Unless both were complicit.
How could any agreement with such a country be entered into or relied upon in the future? I don't think it will come to this, but China's honor may be at risk because of a few minor accounting disagreements. Why not honor current and past rules, and make adjustments going forward? Anything else may create an unfavorable impression enduring far into the future, with much greater consequences than a few accounting agreements.
AI
