March 17, 2022: On Wednesday, China signaled support for Chinese stocks after days of worries about U.S. delisting risks sent the stocks plunging in New York and Hong Kong.

State media said that Chinese and U.S. regulators are progressing toward a cooperation plan on U.S.-listed Chinese stocks, citing a financial stability meeting chaired by Vice Premier Liu He.

Liu heads the central government’s finance committee and is a Chinese Communist Party’s central committee politburo, the country’s second-highest circle of power.

“The Chinese government keeps on supporting various kinds of businesses’ overseas listings,” the state media report said in Chinese, translated by CNBC. The article noted that regulators should “complete as soon as possible” the crackdown on internet platform companies.

The report of Wednesday’s meeting said authorities would work towards stability in Hong Kong’s financial market and the struggling real estate sector.

Hong Kong’s Hang Seng Index extended earlier gains, increasing 9% Wednesday afternoon, rebounding from its lowest close in six years. Chinese tech giants Alibaba and Tencent soared over 20%, while other major Chinese tech stocks increased.

“China’s top leaders finally broke the silence to respond to the recent market selloff,” Larry Hu, chief China economist at Macquarie, said in a report. “The tone of the meeting is strong, which suggests that policymakers are deeply concerned about the new market rout.”

Worries regarding forced Chinese stock delistings from U.S. exchanges had added to investors’ concerns regarding economic growth following a resurgence of Covid-19 and the Ukraine war. On Monday, JPMorgan China Internet analysts Alex Yao and a team said they considered the sector “uninvestable” for the coming six to 12 months and downgraded 28 of the stocks they cover.

The U.S. Securities and Exchange Commission said that U.S.-listed securities for five Chinese companies are at risk of delisting in the previous week.

It was the first time the regulator named specific stocks for failing to adhere to the Holding Foreign Companies Accountable Act. Passed the act would allow the SEC to delist Chinese companies from U.S. exchanges if American regulators did not review company audits for three consecutive years.

Beijing’s concerns regarding information security have generally prevented Chinese companies from permitting audits.

Early on Friday, the China Securities Regulatory Commission said that it had made progress in communication with the U.S. Public Company Accounting Oversight Board and the Ministry of Finance.

“We believe that through joint effort, both sides will be able to make arrangements for cooperation in line with the two countries’ legal and regulatory requirements,” the Chinese securities regulator’s statement said, according to a CNBC translation.