By Kevin Yao

BOAO, China (Reuters) -China's securities watchdog is holding regular talks with U.S. regulators over audit cooperation and expects a deal soon, a Chinese regulatory official said on Thursday about a dispute that could lead to delistings of U.S.-listed Chinese firms.

The comments by Fang Xinghai, vice chairman of the China Securities Regulatory Commission (CSRC), represent the latest gesture from Beijing that it is willing to solve the long-standing dispute with Washington.

"I'm very confident that we will reach an agreement in the near future, so that PCAOB could conduct checks on Chinese accounting firms in China in a reasonable way," Fang said at the annual Boao Asia Forum, referring to the Public Company Accounting Oversight Board, the U.S. audit regulator.

"This uncertainty will be removed soon, and this will be good news for Chinese stocks listed overseas," Fang added.

Investors, however, continued to dump China tech stocks on Friday, after news the U.S. Securities and Exchange Commission (SEC) had identified 17 more U.S.-listed companies, mostly Chinese firms including Li Auto Inc, Zhihu Inc and Sohu (NASDAQ:SOHU).com, that face delisting risk under U.S. law.

This adds to a list of 11 companies the SEC identified in March, which include Baidu Inc (NASDAQ:BIDU) and Yum China.

"I don't think that China and the U.S. can reach a deal anytime soon," said Yuan Yuwei, hedge fund manager at Water Wisdom Asset Management, citing geopolitical tensions.

There is also growing worries among investors about the cost of China's zero-COVID policy and strict lockdowns, he added.

Hong Kong's Hang Seng Tech Index fell as much as 3.6% on Friday morning, while the Nasdaq Golden Dragon China Index tumbled 5.2% overnight.

The market's apathy toward Fang's remarks "reflects investors' weariness amid long-running Sino-U.S. frictions", said Zhang Yingbiao, fund manager at Shenzhen Dragon Huijin Fund Management Co. "In addition, fund managers care more about the impact of COVID in China, so are standing on the sidelines."

AUDIT

PCAOB has asked for complete access to audit working papers of New York-listed Chinese companies.

But the request has so far been denied by China on national security grounds - a standoff that could lead to roughly 270 firms being forced to delist from American exchanges by 2024.

On April 2, China published draft confidentiality rules that would potentially give U.S. regulators access to Chinese firms' working papers, through joint inspections or other form of regulatory cooperations.

Meanwhile, the rules put the onus on Chinese companies to protect state secretes.

"Negotiations between the CSRC-led Chinese negotiation team and them have been progressing very smoothly," Fang said on Thursday.

He reiterated that the "CSRC's attitude is to support firms to list overseas, and support firms to choose markets where they want to list".

There were previous media reports suggesting progress in the U.S.-China talks, but U.S. securities and audit regulators had pushed back on speculation of an imminent deal with China.