For a decade, the SEC has unsuccessfully attempted to obtain Chinese cooperation with the PCAOB. markets, has long been blocked from auditing Chinese firms in the same way that they do U.S. Public Company Accounting Oversight Board (PCAOB), which generally audits firms before they are listed on U.S. regulators” from viewing the company’s financial records. exchanges was “reckless and irresponsible” as long as Chinese leaders continued to “block U.S. Marco Rubio said that allowing Didi to trade in U.S. Some reporting suggests that Didi, despite its protestations to the contrary, knew about the Cybersecurity Administration of China’s data security concerns before its market debut. policymakers have called for a Securities and Exchange Commission (SEC) investigation into whether investors were misled by statements from the Chinese company. As the entire Chinese tech sector continues to slump, U.S. On July 9, Chinese regulators ordered the removal of 25 more apps linked to Didi from Chinese app stores. investors faced major losses from the Chinese crackdown, as Didi’s valuation tumbled from $70 billion to $57 billion on July 7 and dropped another 7 percent before markets opened the following day. However, Zou Xiaodong, vice president of the China Academy of Information Security and an important voice in Chinese cybersecurity regulation, says the move was neither sudden or unpredictable, nor related to U.S.-China decoupling-it was simply the natural outgrowth of China’s maturing data governance regime. Viewed through that lens, the new cybersecurity reviews are a continuation of Chinese regulators’ broader crackdown on “platform” companies, whose currency is Chinese user data. This latest move lends credence to a growing consensus that Chinese regulators are keen to keep their monopoly and control over the user data collected by their homegrown companies. This includes sharing information with foreign law enforcement authorities. This set of rules comes on the heels of China’s Data Security Law, which promised additional oversight of data sharing and hefty punishments for those who breached cross-border data transfer rules. The new audits and restrictions are expected to affect primarily foreign data use. Those companies that exceed this threshold will be “required to undergo a cybersecurity review,” including potential ramifications of data transfer for Chinese national security ( including “risk of supply chain interruption” and the risk of data being “maliciously used by foreign governments”), before conducting an IPO in markets outside China. The regulations will apply to any Chinese firm with more than 1 million users. The State Council also announced a set of new cross-border data security regulations.

Didi indicated that it had no knowledge that such a crackdown was coming.Ĭommentators believe this is a strong signal of China’s intent to “discourage listings of Chinese tech companies in the United States,” which some see as “the last brick of the digital Berlin Wall” separating the Chinese internet from the global internet. After the measures were announced, the company’s freshly issued stock tumbled more than 30 percent in four days. On July 2, the Cyberspace Administration of China announced that it was placing Didi under investigation over data security concerns and ordered app stores to remove Didi, preventing the company from acquiring new users. New Chinese regulations rolled out in the wake of Didi’s disastrous launch mandate cybersecurity reviews to ensure the safety of user data before Chinese tech companies will be allowed to go public overseas. When Didi’s stocks began trading as scheduled, Beijing reacted quickly, announcing that it was cracking down on the company’s cybersecurity practices and prohibiting the company from accepting any new users in its mostly China-based market. But the launch apparently surprised Chinese regulators, who reportedly thought they had put the brakes on by warning the company not to move ahead with the IPO. Chinese ride-sharing giant, Didi Chuxing, launched on the New York Stock Exchange on June 30, quickly raising $4.4 billion-the largest initial public offering (IPO) of a Chinese company since Alibaba in 2014.

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