On 13 September 2024, The Wall Street Journal, The New York Times and other news outlets reported that China had fined the giant accounting firm $62 million for its work related to the People’s Republic of China (PRC) real estate bust.

Something is off.

When I could still go to the PRC with a reasonable expectation of being able to return to Texas, and as a board member of the PRC’s biggest wind blade manufacturing company, I reviewed several accounting audits. Every single one had to have an official PRC “chop,” a red stamp indicating that the government approved the audit.  Getting the official chop was like securing a government license to keep doing business.  The government stamp of approval indicated that the company and its auditors had presented the company’s position accurately.  The legal significance associated with a chop was like having an IRS letter saying that a taxpayer had passed an IRS audit for a given year. For the PRC to fine PwC and suspend its operations after a PRC official almost certainly had already approved company audits suggests tensions within the Communist Party of China (CPC) are growing. Sure, those tensions suggest different prioritizations of policy.  They may also reflect power struggles within the CPC, or, as some say, “behind the Chinese curtain.”

Regardless of the reason, US policy makers should recognize both danger within the PRC and opportunity for US diplomacy.