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China In-Focus — Asian Giant’s April FX Reserves Fall; US and Chinese regulators in talks for audit deal; Tesla aims for pre-lockdown production in Shanghai

BEIJING (Reuters) – China’s foreign exchange reserves fell by $68 billion in April, the biggest drop in five-and-a-half years, official data showed on Saturday, as the dollar climbed as foreign investors slumped. shed Chinese equities on worries about a slowing economy.

The country’s foreign exchange reserves – the largest in the world – fell to $3.12 trillion last month from $3.18 trillion in March, the biggest monthly drop since November 2016.

Analysts polled by Reuters expected reserves to fall to $3.13 trillion in April.

The State Administration of Foreign Exchange said in a statement that the 2% decline in reserves in April compared to March mainly reflected the valuation effect as the dollar appreciated against other major currencies and the changes in global asset prices.

“In April 2022, China’s cross-border funds generally continued the trend of net inflows, and supply and demand in the domestic foreign exchange market remained basically balanced,” SAFE said.

The yuan fell 4% against the dollar in April, while the dollar rose 5% in April against a basket of other major currencies.

Foreign investors extended their sales of Chinese stocks through April amid growing worries about the impact of prolonged COVID-19 shutdowns and fallout from the Ukraine-Russia war.

China’s foreign exchange reserves fell by $130 billion in the first four months, official data showed. They had climbed to $33.6 billion in 2021.

China held 62.64 million troy ounces of gold at the end of April, unchanged from a month earlier. The value of China’s gold reserves fell to $119.73 billion at the end of April from $121.66 billion at the end of March.

US and Chinese regulators in talks for audit deal

The standoff, if left unresolved, could see Chinese companies kicked out of New York stock exchanges. (Shutterstock)

U.S. and Chinese regulators are in talks to settle a long-running dispute over audit compliance for U.S.-listed Chinese companies, three people briefed on the matter told Reuters.

The standoff, if left unresolved, could see Chinese companies kicked out of New York stock exchanges.

The US Public Company Accounting Oversight Board, also known as the PCAOB, denied an earlier report by Reuters that a team from the agency had arrived in Beijing for interviews.

This week, the U.S. Securities and Exchange Commission added more than 80 companies, including e-commerce giant and China Petroleum & Chemical Corp., to the list of companies subject to eviction.

The talks between PCAOB officials and their counterparts at the China Securities Regulatory Commission can be called a “late stage” after China made concessions in recent months, the people said.

But a PCAOB spokesperson said: “Recent reports that PCAOB officials are currently in China, or that PCAOB officials were in China earlier this year conducting face-to-face negotiations, are false. The PCAOB has not sent any personnel to China since 2017.”

He said the board continued to engage with Chinese officials but “speculation on a final deal remains premature.” Accordingly, the PCAOB provides for “various scenarios”.

Chinese authorities have long been reluctant to let foreign regulators inspect local accounting firms, citing national security concerns.

But in a key concession, Chinese regulators proposed last month to revise confidentiality rules for overseas listings and remove requirements that on-site inspections of Chinese companies listed overseas must be conducted primarily by national regulators.

Sources told Reuters last month that a preliminary framework for audit oversight cooperation between the two countries had been formed.

The row over audit oversight of Chinese companies listed in New York, which had been simmering for more than a decade, came to a head in December when the SEC finalized rules for delisting Chinese companies under the Securities Act. liability of foreign companies. He said there were 273 companies at risk but did not name them.

Last Friday, the PCAOB identified 128 Chinese companies at risk of delisting.

The issue has been a major factor that has weighed on US certificates of deposit issued by Chinese companies, with the Nasdaq Golden Dragon China index having fallen 57% in the past 12 months.

Goldman Sachs estimated in March that US institutional investors held around $200 billion in Chinese ADRs.

Tesla targets pre-lockdown production in Shanghai by mid-May

This will bring weekly production to 16,900 vehicles based on Tesla’s established work week at the site. (Shutterstock)

Tesla Inc. is aiming to increase production at its Shanghai factory to 2,600 cars a day from May 16, it said in an internal memo seen by Reuters, as it seeks to restore production to normal levels. levels prior to city shutdown to control COVID-19.

Tesla, which is now working just one shift, plans to add more at its Shanghai factory from May 16 to meet the target, according to the memo reviewed by Reuters.

That would bring weekly production to 16,900 vehicles based on Tesla’s established workweek at the factory, according to Reuters calculations.

It would also represent a return to production levels at the factory before Shanghai’s lockdown in late March forced the company to suspend work there.

Tesla declined to provide immediate comment.

Prior to the lockdown, Tesla had worked three shifts at the Shanghai factory. The factory, which makes Tesla’s Model 3 and Model Y, reopened on April 19 after a 22-day shutdown, the longest since the site opened in late 2019.

The Shanghai lockdown has also been difficult for Tesla and other manufacturers due to the complication of obtaining parts from suppliers.

(With contributions from Reuters)