BEIJING -- A mounting dispute between Washington and Beijing over access to records of Chinese companies with U.S.-traded shares might force major corporate names such as oil giant PetroChina and search engine Baidu to withdraw from American stock exchanges.
The dispute highlights the clash between heightened U.S. anti-fraud efforts and official Chinese secrecy, despite Beijing's desire to profit from deeper links with the global economy.
This month, the U.S. Securities and Exchange Commission accused the Chinese affiliates of five major accounting firms of impeding fraud investigations of nine companies by failing to hand over documents. Separately, an American panel that oversees accounting wants to inspect Chinese auditors of U.S.-traded companies.
Beijing has resisted expanding access to corporate records as a violation of its sovereignty.
Without a compromise, China-based accountants might be stripped of authorization to prepare financial reports required by U.S. regulators, said Paul Gillis, an accounting professor at Peking University's business school. That could make it impossible to trade Chinese shares in the United States.
"The SEC action makes it seem as if the Chinese have to give in . . . which will make them lose face, so they are unlikely to give way on that," Gillis said.
A ruling on the SEC's complaint is not due until 2013. That allows time for negotiation and, if no settlement is reached, for companies to buy back their shares or move to Hong Kong or another non-U.S. exchange.
Still, the wholesale departure of Chinese companies from American stock markets would be a setback to closer financial ties between the world's two biggest economies. Chinese companies are expanding abroad and acquiring assets such as state-owned CNOOC Ltd.'s $15.1-billion purchase this month of Canadian oil and gas producer Nexen.
Chinese companies have raised more money in U.S. stock markets in the past decade than companies from any other country except the United States. A departure would reduce the options American investors have for profiting from China's rapid economic growth.