US Financial Market's China Problem (I)

For decades Chinese companies listed on U.S. stock exchanges enjoy a regulatory privilege: they don’t need to show their audits to American regulators for inspection, even though it is required by US law and other companies comply with it. Why is this? According to the Public Company Accounting Oversight Board (PCAOB): “… Chinese laws governing the protection of state secrets and national security have been invoked to limit foreign access to China-based business books and records and audit work papers.” In other words, American regulators cannot inspect the audit paperwork of, for example, the well-known fraudulent Luckin Coffee, because its China based auditing firm cited China’s “state secrets and national security” reason. This represents one of the biggest blind spots in US stock market oversight…