Friday 27 August 2021 9:11 am

Tech crackdown: China proposes banning local sensitive data firms from US IPOs

China has turned its attention to the US stock market amid its tech sector crackdown, according to reports, by suggesting new rules that ban sensitive data firms from listing.

The new rules target internet companies, but the China Securities Regulatory Commission, its local market watchdog, has said that those in the pharmaceutical industry, are still likely to receive regulatory approval for foreign listings, according to the Wall Street Journal.

Chinese firms that have been central to the regulatory clampdown, Alibaba, Didi and Tencent, have already listed offshore via a corporate structure known as a Variable Interest Entity.

Beijing officials consider internet, telecommunications and education sectors as sensitive due to political or national-security concerns over the data the firm’s hold, which has fuelled its backing behind its controversial national security law.

It comes as China has hit pause on more than 40 initial public offerings (IPOs) in recent weeks, as Chinese regulators began to target several intermediaries in the deals.

The Shenzhen Stock Exchange has suspended more than 30 IPOs including public listing plans by electric car manufacturer BYD’s chip-making unit.

Its Shanghai Stock Exchange has frozen eight listings which were on route for the city’s tech-focused STAR Market since last week, according to official exchange disclosures.

While its Hong Kong market, known as being a gateway to China for international investors, has watched IPOs run dry this month – following more than a year of political upheaval.

It spells trouble for China’s successful tech industry, as recent market volatility has scuppered plans to list locally – but geopolitical tensions have restricted foreign floats.