How and why China blocks Alibaba and ByteDance from US capital
From February 15, the Chinese cyberspace regulator will implement new cybersecurity rules. Here's what China has foreseen for giants like Alibaba and ByteDance
The Cyber Administration of China (Cac), the Chinese cyberspace regulator, has announced that from February 15 it will implement new IT security rules together with other national authorities.
The official goal is to protect national security, the unofficial one to discourage Chinese big techs to seek capital abroad. Especially in the United States.
WHAT THE BEIJING STRAIGHT ENDS
The new rules, effective next month, require platform companies – such as e-commerce giant Alibaba and ByteDance (TikTok) – that own the data of more than 1 million users to undergo a stringent cybersecurity check. before listing their shares overseas.
In the event of a possible compromise of national security, they would not be allowed to land on other markets. Neither ByteDance nor Alibaba responded to Reuters' request for comment.
HOW CHINA IS JUSTIFIED
"With stock market listings, there is a risk that strategic information infrastructures, important data or a large amount of personal information could be hacked, controlled or misused by foreign governments," the CAC said in a reported statement. from Reuters , reiterating a concern already reported in July when the changes were first proposed.
A NORM THAT CORRECTES THE PAST OR ONLY THE FUTURE?
The new rules, the news agency said, did not specify whether the planned changes are retroactive. “If this is not retroactive, then it would only affect listing applicants and not companies already listed. That said, companies in the latter field already have a lot of ideas, ”said Justin Tang, head of Asian research at the United First Partners investment group in Singapore.
EVEN MORE ALGORITHM CHECKS
In another statement, Reuters continues, the regulator said it would also implement new rules on March 1 on the use of artificial intelligence algorithms that suggest online content.
Again, the goal is to control publishers who use this technology to disseminate information. The rules will give users who want it the right to deactivate the service.
NOT A NEW
The move by the CAC is just the latest in a series of regulatory changes that China has been implementing for some time. In fact, it comes after the approval of the data security law concerning the archiving of data and that on the protection of personal information regarding data confidentiality.
Changes that, Reuters reports, over the past year have dampened companies' appetite to go public overseas, but bankers hope the new rules will provide more clarity in 2022.
SILENCE PRESS ON HONG KONG
There was no mention of placements in Hong Kong. The CAC, in fact, unlike what happened in past announcements, did not specify whether the rules will apply to companies seeking to be listed in Hong Kong, considering it de facto territory of China.
"Hong Kong is treated as part of China, offshore even though it is not a foreign market, and this paves the way for more deals to return to Hong Kong," a banker from a Western institution told Reuters . Thus going to the detriment of the US price lists.
HOW THE BAG REACTED
The upcoming news and the doubt whether these will have a retroactive value have weighed on the index that tracks the sector, the Hang Seng Tech Index which, writes Milano Finanza , "has lost more than 1%, while the main index has closed slightly above par (+ 0.06%) ".
"Emblematic – he continues – is the fact that the stock of Hong Kong Exchanges and Clearing, the operator of the city-state stock exchange, fell by 1.1%, after falling to 2.4% following the announcement . The Shanghai Star 50 index, the Chinese equivalent of the Nasdaq, lost 2.4%, while the Shenzhen Chinext start-up list dropped 2.2% ".
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/come-e-perche-la-cina-blinda-alibaba-e-bytedance-da-capitali-usa/ on Sun, 09 Jan 2022 13:55:19 +0000.