China’s tech sector is set to face more pressures as authorities prepare a blacklist targeting new companies in sensitive sectors that use variable interest entities.
The blacklist will target VIEs holding Chinese businesses in sectors that were data-intensive or involved with national security concerns, according to a «Financial Times» report citing unnamed sources.
The list is being created by a list of Chinese authorities – including the state planner, commerce ministry, securities regulator and central bank – and could be published as early as this month depending on developments from new regulation for U.S.-listed Chinese firms.
No More Future VIEs
According to the report, the new initiative of creating a blacklist was aimed at future companies using VIEs rather than existing firms, in line with statements by Chinese regulators denying a ban on the usage of the structure.
«VIEs are not dead entirely, but essentially they are [for future purposes],» said one of the sources. «In the future, foreign investors can put money into traditional industries as opposed to tech.»
Last week, Didi announced that it would delist from the New York Stock Exchange amid reports that the decision was made following a request by China’s cybersecurity watchdog over concerns about leakage of sensitive data.
