Beijing reverses ban on tech companies listing offshore
Announcement comes as Chinese ride-hailing DiDi Chuxing delists from NYSE under pressure
The Chinese government has announced that it will again allow "platform companies" – Beijing's term for tech giants – to list on overseas stock markets, marking a loosening of restrictions on the sector.
"Platform companies will be encouraged to list on domestic and overseas markets in accordance with laws and regulations," announced premier Li Keqiang at an executive meeting of China's State Council – a body akin to cabinet in the USA or parliamentary democracies.
The statement comes a week after vice premier Liu He advocated technology and government cooperation and a digital economy that supports an opening to "the outside world" to around 100 members of the Chinese People's Political Consultative Congress (CPPCC).
Those initiatives contrast with China's recent actions that reined in its big tech companies, and the ongoing campaign to regulate online activities such as gaming, sharing freewheeling opinions, data storage, and anticompetitive behavior.
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China's strict COVID-19 lockdowns have seen tech execs warn of wide economic damage, and the announcement that platform companies will be allowed to list overseas was made as part of a larger set of initiatives aimed at stimulating the domestic economy.
But for some Chinese tech companies that sought to list abroad, this change could be too little, too late.
Just days after Chinese Uber analog DiDi Chuxing floated on the New York Stock Exchange (NYSE), Beijing's regulators launched an investigation into its data protection policies.
Chinese regulators were specifically concerned about the app's ability to collect personal information in violation of PRC laws and regulations. They promptly removed the app from local app stores, along with 25 others, citing national security concerns.
Regulators then pressured the company to delist from NYSE and list in Hong Kong instead, which it dutifully announced it would do, having been beaten down by the China app store removal and a US Securities and Exchange Commission investigation.
On Monday, the company announced it had advised the NYSE to proceed with its delisting following a shareholder vote. Shares are expected to be delisted in June. ®