Local companies interested in starting stock trading in the United States may begin to demand that China transfer the management of their data to third-party companies in the country. The move, which has not yet been confirmed, is part of a new set of rules applicable to Chinese multinationals as a way to reduce the sending of data from citizens abroad.
This possibility is part of the government’s plan to expand control over national security and technology bases. The agencies responsible for this regulation will preferably be state-owned, but this requirement is still being explored, while the financial analysts ’assessment of the new rules, in prior agreement with companies in the country of priority, was made next month.
The changes revealed by sources to the Reuters news agency are part of a larger package of the Chinese government that aims to increase the oversight and control of technology companies, mainly in the Internet sector, which has been operating relatively independently for many years. Companies and investors from across the country will take part in the discussions, while approvals for disclosure on stock exchanges abroad have been suspended.
Want to get the best tech news of the day? Subscribe to our new YouTube channel, Canaltech News. Summary of the top news of the tech world every day is for you!
Officially, the government is talking about protecting national sovereignty and creating adequate rules to prevent monopolies and actions that affect competitiveness. However, analysts point out that these changes are in response to requests from the US Securities and Exchange Commission for more information on risks and guarantees for Chinese companies seeking to go public in the US stock market. It did not please the legislators much.
This year alone, 37 Chinese companies have begun trading their shares in the United States, with contracts already totaling $ 12.6 billion, more than double the amount recorded in full 2020. More specifically, the movements could have started after the government launched a cyber security investigation into Didi Global, which owns 99, among other companies in the world, in connection with the sending of local data outside China.
In fact, the federation is already working to enforce the new rules, showing great potential for law enforcement to be effective. Didi will be in contact with a Chinese state-owned company to manage the local data of its users, but denied that information to the press. Meanwhile, analysts point out that multinational companies could also act as a standard used by the Chinese government for other companies in the country that trade shares abroad.
While the new regulation is still being discussed and speculated, China has already taken concrete steps to apply the new laws related to privacy and data control. This Friday (20), the country approved a new legislation aimed at this decision, whose rules will apply from November and include new restrictions and transparency measures related to the use of data.
In September, a second law comes into force, forcing infrastructure companies or companies that use “critical” data to make occasional risk assessments. Authorities should obtain such reports and conduct inspections, and those who disagree may receive sanctions.
Meanwhile, the immediate nature of the study led to a decline in investor confidence and a fall in Chinese company stocks. The Shanghai Stock Exchange, for example, showed a sharp decline last Tuesday (17), and when it began to emerge comments about the new rules, they fell again shortly afterwards – the market closed at a low of 1, 1 this Friday. %
Did you like this article?
Subscribe to CanalTech with your email to get daily updates with the latest news from the tech world.
“Communicator. Award-winning creator. Certified twitter geek. Music ninja. General web evangelist.”