China plans to propose new rules that would ban firms with large amounts of sensitive consumer data from US-listing, according to a report by The Wall Street Journal on Friday.
- In recent weeks, China’s stock regulator officials told some companies and international investors that the new rules would prohibit internet firms holding a string of user-related data from listing abroad.
- The regulators stated that the rules target companies looking for foreign IPOs via units incorporated outside the country.
- China Securities Regulatory Commission officials stated that companies with less sensitive data are likely to receive Chinese regulatory approval for foreign listings.
- The new rules are likely to help Beijing gain more control over the complex corporate structure that China’s biggest tech companies use to avoid restrictions on foreign investment.
- Chinese leaders consider such sectors as the internet, telecommunications, and education sensitive because of political or national-security concerns.
Chinese technology giants, including Alibaba Group Holding Ltd., Didi Global Inc., and Tencent Holdings Ltd., have used such a corporate structure known as a Variable Interest Entity to attract foreign capital and list offshore.
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