On November6, 2019, the European Commission adopteda decision on the adequacy of the competent authorities of the People’s Republic of China with respect to statutory audit oversight pursuant to EU statutory audit directive 2006/43/EC. The decision, following the recognition in the audit regulatory equivalence between China and the EU in 2011, marks a new milestone for China-EU cooperation on audit oversight. It is also an important outcome of the China-EU Economic and Financial Dialogue. EU member states could negotiate and sign agreements with the Ministry of Finance of the People’s Republic of China and other Chinese regulators to achieve mutual benefits and perform audit supervision duties when the Decision takes effect on November 15, 2019.

The implementation of the Decision bears great significance for the two sides to strengthen communication and economic cooperation on trade and finance, and to promote openness in accounting and audit field. On the basis of audit oversight equivalence achieved in 2011, the Decision lays a solid foundation for the bilateral auditregulatory cooperation between China and EU member states. It would help establish a long term mechanism for audit oversight that benefits both China and EU member states, and also facilitate investment and financing for the enterprises from both sides. The audit regulatory cooperation between China and the EU would boost Chinese enterprises to go global, and broaden the international vision of China’s accounting profession. The regulatory cooperation between Chinese competent authorities and their counterparts from EU member states is expected to create a sound environment for communication and cooperation under the Belt and Road Initiative, and would help the outside world better understand China’s regulatory cooperation principles of “mutual respect for sovereignty and domestic laws, and mutual reliance”.