SHANGHAI, China — The country’s internet regulator said on Saturday that companies seeking to list overseas will be subjected to regulatory screening by Beijing authorities if they have 1 million or more users with registered personal information. The decision is China’s first major step in its campaign to prevent Chinese companies from listing on foreign exchanges. A lot of companies with millions of registered internet users are based in China. Many businesses will be affected by the crackdown, which will cast a pall over the country’s tech sector. The Chinese Cyberspace Administration began accepting public opinions on the adjustment of its network safety review methods on Saturday. The updated plan contains a new section requiring organizations with over 1 million people’s personal information to undergo a security examination before listing overseas. Companies from China will also have to provide information about their first public offerings. A “special review,” which is undertaken when authorities disagree, was previously completed in 45 days, but will now be prolonged to three months as China seeks to be cautious in its assessments. Beijing has already launched a number of investigations into Chinese businesses that have gone public in other countries. Following its IPO on the New York Stock Exchange, Chinese authorities started an investigation into Didi Global’s app and halted downloads due to data law violations. The internet regulator has also revealed that two additional Chinese enterprises that recently had their public debuts in the United States are being investigated for national security concerns. According to some sources, Chinese podcast and audio app Ximalaya has canceled preparations to float on the New York Stock Exchange due to pressure from Beijing. The corporation has about 200 million monthly active users and collects a lot of personal data, including voiceprint data. Zuoyebang, a Chinese online education app, is also rumored to be eyeing an IPO in the United States. The startup, which is supported by SoftBank Group and Alibaba Group Holding, has over 100 million monthly users and a lot of personal data on kids. China’s crackdown is intensifying amid rising tensions between Beijing and Washington, particularly in an era where data may determine a company’s or a country’s competitiveness. Excessive regulation, on the other hand, may pose a risk of stunting a company’s future growth./n
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