China plans to ban technology IPOs in the US due to sources of IT risks

Charging…

(Reuters) – China is setting rules to ban internet companies whose data poses a potential security risk from listing outside the country, including the United States, a person familiar with the matter said.

The ban is expected to be imposed on companies involved in ideological matters as well, said the person, who asked not to be named because it is a matter of confidentiality.

Beijing said last month that it plans to tighten controls on all foreign listed companies, a drastic regulatory change that followed a cybersecurity investigation into carrier giant Didi Global just days after it was listed in the United States.

Under the rules being drafted, the China Securities Regulatory Commission (CSRC) plans to ban companies that collect a large amount of user data or create content listed abroad, the person said.

The CSRC did not immediately respond to a request for comment from Reuters.

The plan is one of several proposals Chinese regulators are considering at a time when Beijing has tightened its grip on the country’s internet platforms in recent months, including an intention to tighten scrutiny of overseas listings.

The crackdown, which has sent stocks plummeting and slashed investor confidence, has targeted particularly unfair competition and Internet-based companies’ processing of a huge volume of consumer data, after years of taking a more liberal approach.

The Wall Street Journal was the first to publish new rules that would prevent Internet companies with a strip of user data from being listed overseas.

(Reporting by Tony Munro in Beijing, Zhang Yan in Shanghai, and Barjav Acharya in Bengaluru; Editing by Sumit Chatterjee and Jason Neely; translated by Flora Gomez in the Gdansk Newsroom)

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