China is tightening restrictions on companies looking to enter the overseas market amid a wave of Chinese-born IPOs in the United States. Regulators have thrown down the gauntlet for local companies announcing new privacy rules for those seeking quotations on foreign stock exchanges, according to Reuters. As a result, any company that has data on more than a million customers must face an overview of how they handle that information in order to obtain a foreign IPO license.
Regulators will study the risks of these data being influenced, controlled or manipulated by external governments following overseas flotation. In a broader effort to find companies local lists, China is adding two sets of rules focusing on data collection and storage to its Data Security Act and Personal Data Protection Act.
The restrictions come amid a breach of privacy by Beijing. Regulators have previously rattled their swords TikTok and LinkedIn for alleged data breaches. Just last week, authorities caused shock waves by ordering a giant that welcomes riding Didi to remove his app from mobile stores after listing in the U.S., which caused its shares to fall by 20 percent.
As US-Chinese tensions continue to subside, the decision is likely to put pressure on President Biden to step up oversight of Chinese companies. The animosity created by Trump-era politics has eased in recent months after the removal of China Xiaomi and Luokung Technology from military block lists, which prevented Americans from buying and holding their shares. The expected thaw in relations under Biden is likely to have spurred recent increases in Chinese companies ’inputs. Last year, companies based in China collected 11.7 billion dollars 30 IPOs in the US, with even more flotation occurring this year.
All products recommended by Engadget are selected by our editorial team, regardless of our parent company. Some of our stories include associated links. If you purchase something through one of these links, we may earn an associated commission.