Eyeing home and looking beyond quick fixes

China and the US should, therefore, roll out a road map under which comprehensive cooperation in cross-border supervision over securities trading can be made possible, he said.

The first step China should take is to sign the Enhanced Multilateral Memorandum of Understanding Concerning Consultation and Cooperation and the Exchange of Information, which was released by the International Organization of Securities Commissions in 2017 to offer securities regulators worldwide new enforcement powers for cross-border cooperation.

Supervision over auditing should kick in for the next phase of China-US cooperation. The Chinese regulators can assist in providing audit working papers, conduct joint inspections into audit firms' programs, or jointly look into the overall service quality of audit firms.

By taking such smaller steps, the bilateral audit supervision agreement may be reached, upon which an overall cross-border securities cooperative agreement for the long term can be built, he said.

Until that becomes reality, US-listed Chinese companies have no other alternative but to look for short-term solutions as the time is ticking for them on the US bourses.

Such companies will consider going private, returning to the A-share market or listing in Hong Kong.

Going private may be least welcome to listed companies as it indicates they will have to give up the financial market in general. Morning Whistle Group, a Shanghai-based industrial investment services provider, estimated that 48 relatively smaller US-listed Chinese companies may opt to go private.

As categorized by CITIC Securities analysts, companies having major information security risks will return to the A-share market or the Hong Kong stock market at a faster pace, including those related to national defense, military and energy. Companies possessing public data, covering sectors like finance, logistics, ride-hailing, biology and medicine, will also find a quicker way back.

One possible choice is to list part of the company's business or assets on the A-share market, which is allowed according to the Shanghai and Shenzhen exchanges' regulations.

Or, these companies can seek a complete return to the A-share market. It has been made possible by the adoption of the registration-based IPO mechanism in July 2019, as requirements on shareholding structure, profitability or sales revenue have been largely relaxed.

With the registration-based IPO mechanism, returning companies do not have to change their "red-chip" shareholding structure－it helps them to hold or control onshore assets either directly or indirectly through the use of offshore special purpose vehicles incorporated outside the Chinese mainland－to make an IPO or issue depositary receipts on the A-share market. They need to obtain approvals from the CSRC and other government departments such as the National Development and Reform Commission and the Ministry of Commerce.