The U.S. requires listed firms to open their books to regulators. But Beijing has never allowed such access. Washington largely turned a blind eye to let American investors profit from China’s leading firms, but that could be coming to an end as Washington looks to get tough on China. 

The showdown began in 2021, when the U.S. Congress passed the Holding Foreign Companies Accountable Act (HFCAA), which included tough new rules for U.S.-listed Chinese stocks. Washington agreed that Chinese companies must prove that they’re not state controlled, and that their auditors comply with American inspectors for three consecutive years—or be delisted from U.S. stock exchanges like the Nasdaq and New York Stock Exchange (NYSE) by 2024. 

Now, around 261 U.S.-listed Chinese stocks worth $1.3 trillion are in limbo as U.S. and Chinese officials scramble to reach a final agreement on the issue. Beijing is especially keen to come to a quick consensus, because a China competition bill being debated in Congress right now includes a provision to shorten the delisting deadline to March 2023. That means if Chinese companies don’t open their books by then, they’ll be kicked off Wall Street. China also hopes to stave off a blow to its economy that’s projected to slow to 4.3% growth this year. 

And perhaps most important, everything depends on one crucial point of contention between the U.S. and China: how much, and what kind of information Chinese companies and their auditors are allowed to redact in audit papers shown to American regulators, according to a new Bloomberg report. U.S. regulators want full access to Chinese firms’ audit papers. Chinese regulators are worried about sensitive information falling into U.S. hands.

In April, China’s Securities Regulatory Commission, in an unprecedented move, said it would start allowing American regulators to access the books of U.S.-listed Chinese firms. Beijing’s April concession came as Washington began releasing groups of Chinese firms to be delisted, indicating that it’s serious about booting companies from American exchanges. Since then, the U.S. has added over 80 firms to its catalog of stocks to be delisted—which includes some of China’s most vaunted and valuable companies, including electronic carmaker Nio, e-commerce titan JD.com, and grocery app Pinduoduo.

It’s unclear which companies will be allowed by China to share their information with U.S. regulators. Beijing says that overseas-listed firms can open their books, but China wants a compromise that blocks U.S. audits of tech firms and state-owned enterprises (SOEs) that the state deems to hold sensitive information, Adam Montanaro, investment director of global emerging-markets equities at Abrdn told Fortune in April. 

Beijing also hasn’t clarified what constitutes “sensitive” or “classified” information that can’t be shared with overseas regulators, leaving Chinese companies unclear on how to comply. 

The U.S. Securities and Exchange Commission Chair Gary Gensler has stated that full compliance with U.S. rules are nonnegotiable.

It’s not clear that Washington will accept Beijing’s desire to allow for some—but not all—full audits of U.S.-listed Chinese firms. But Chinese firms that do get booted from the U.S. are expected to relist in Hong Kong or on a mainland stock exchange. Bigger companies can, and will, likely move to the Hong Kong Stock Exchange (HKEX) “as they’re already doing. Some foreign investors will follow,” Jeremy Mark, senior fellow at the Atlantic Council and former International Monetary Fund (IMF) official, told Fortune.

But he adds that the allure of American stock markets and Wall Street’s cachet is “more than a name.” Chinese companies view a listing on Wall Street as prestigious and advantageous because the U.S. markets offer access to a bigger and deeper pool of capital.