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US regulators will try to examine Chinese audit files of Alibaba and Yum China next month as part of a landmark deal between Beijing and Washington, according to people familiar with the matter.
The deal, agreed on Friday, allows the US Public Accounting Oversight Board, the US accounting watchdog, to examine the work of audit firms in mainland China and Hong Kong for the first time.
The agreement laid the groundwork for resolving a long-running dispute between the two superpowers that could lead to the United States banning nearly 200 Chinese companies from trading on its exchanges in 2024, threatening the value of about $1.4 trillion in corporate shares.
Jack Ma’s e-commerce group Alibaba Group is the most valuable Chinese company in overseas markets, with a market capitalization of $249 billion on the New York Stock Exchange. Yum China, which owns the KFC and Pizza Hut brands in China, is worth $21 billion in the US markets.
Alibaba is audited by PwC in Hong Kong and Yum China is audited by KPMG Huazhen in mainland China. The Big Four accounting firms, which also include Deloitte and EY, have spent three decades building large operations in China. Together, they audited about 130 Chinese companies listed in the United States, according to the US Securities and Exchange Commission.
Do you think the inspections will go as planned in order to keep Chinese companies listed on US stock exchanges? Tell me what you think of firstname.lastname@example.org. Thank you for reading FirstFT Asia – Emily
Five more stories in the news
1. Russia shuts down Nord Stream gas pipeline to Europe Russia has halted gas flows through its Nord Stream 1 pipeline to Europe for three days, in the latest disruption to an energy link that has been key to Moscow’s efforts to squeeze supplies. The shutdown, which Russia claims is essential for basic maintenance, will increase anxiety in European countries as they seek to secure vital supplies ahead of the winter months.
Related reading: German manufacturers are halting production in response to higher energy prices due to Russian pressure on gas supplies, a trend the government has described as “alarming.”
2. Japan plans to increase major defense spending Japan will upgrade its cruise missiles and conduct research on hypersonic weapons as it seeks to dramatically increase military spending to counter what Tokyo sees as a growing threat from China. The Defense Department today submitted a record budget request of 5.6 trillion yen ($40 billion) for the year ending March 2024, compared to 5.4 trillion yen in planned spending for the current fiscal year.
3. Trump is accused of obstructing the Justice Department’s investigation The US Department of Justice has accused Donald Trump’s team of obstructing its investigation into the alleged mishandling of classified documents from his days in the White House, casting doubt on the former president’s allegations that he cooperated with federal investigators.
4. Toyota invests up to $5.3 billion in battery production The world’s largest automaker will spend up to 730 billion yen ($5.3 billion) in the United States and Japan to accelerate its battery production, the latest in a series of Asian automakers’ investments in electric vehicles. The announcement came just two days after rival Honda and South Korea’s LG Energy Solutions said they had spent $4.4 billion to build a battery factory in the United States.
5. The EU is tearing up the Russia visa deal The European Union has agreed to suspend a visa deal with Moscow and backed demands from eastern member states to limit the number of Russians crossing into their countries, as it is under pressure to punish travelers over Vladimir Putin’s invasion of Ukraine.
Shanghai schools reopen Students will be returning to the classroom months after the Covid-19 shutdown. (The island)
European Medicines Agency meeting The agency is set to review new vaccine boosters by Moderna and BioNTech/Pfizer, which have been adapted to target the Omicron variant. Yesterday, the United States approved Omicron vaccines.
The transfer window in the European Premier League is closed Chelsea net spending over £200m on six confirmed signings, even before the transfer window officially closed today. Premium subscribers can click here to subscribe to our sports newsletter.
What else are we reading
Singapore has become a haven for the Chinese elite in Hollywood production Crazy Rich Asian, Singapore has been portrayed as a cocktail party that never ends, and where luxury is always at hand. Now this already insanely rich city is receiving a new big dose of money — thanks to a new influx of business tycoons across the South China Sea.
Self-driving cars don’t have anything on Japanese self-driving ships Across the world, the race to perfect the fully autonomous operations of large commercial ships is intense, and arguably of far more practical importance than the race for self-driving cars, writes Leo Lewis of the Financial Times.
Drought in China highlights economic pain caused by global warming The heat wave in southwest China was severe, which caused temperatures in Chongqing to rise 7 degrees Celsius above the average level over the past decade. Pervasive power shortages in southwest industry have paralyzed a crisis that scientists said may be caused by climate change.
Rishi Sunak warns of the risks that the markets lose confidence in the UK economy Conservative leadership contender Rishi Sunak warned that ignoring the risks of markets losing confidence in the British economy, in an interview with the Financial Times, would be “irresponsible and irresponsible”. The former adviser said he “struggled to see” how the promises of his opponent, Liz Truss, “tacked in”.
Don’t Ban Private Jets – Make It An Environmentally Friendly Experience Land Public anger against the carbon burp elites is growing, with calls to ban private jets growing. Pelita Clark wonders, should regulators instead turn this wasted means of getting from point A to B into a testing ground for new technologies and fuels.
Thanks to the readers who took our survey yesterday. Of those who responded, 23 per cent said they had experienced new, long-term health problems since contracting Covid-19.
World leaders paid tribute to Mikhail Gorbachev after the former Soviet leader died at the age of 91. But the reaction in Russia has been more muted. Although he ruled in Moscow for less than seven years, the consequences of Gorbachev’s tenure rewrote the world order at the end of the twentieth century.
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