KPMG and EY will see a gradual erosion of their Chinese state-bank and SOE client base.

PwC’s audit failures at Evergrande led Chinese regulators to impose major penalties and suspend the firm, turning auditor risk into a board-level concern for state-linked companies. The revised Audit Law regulation announced yesterday, and effective 1 December 2026, applies further pressure on foreign auditors by allowing the National Audit Office to refer suspected audit violations directly to China’s securities regulator (in essence formalising the enforcement route used against PwC over Evergrande). Because KPMG and EY absorbed the largest share of PwC’s former state-linked clients following the fiasco, they are now the foreign firms most exposed to this uneasy regulatory environment. And with banks such as Bank of Nanjing and Industrial Bank already moving away from the Big Four towards domestic firms, expect to see KPMG and EY partners checking over their shoulders.