Beijing is planning to come up with a blacklist designated to limit the primary way in which Chinese companies have raised funds abroad, effectively making it more challenging for China’s tech firms to list overseas, The Financial Times reported on Tuesday.
The blacklist will include Chinese startups in sectors that handle sensitive data or trigger national security concerns that plan to go public in overseas stock exchanges through the so-called variable interest entities (VIEs) scheme. Chinese authorities could release the negative list as early as this month, according to the FT. Companies that are already listed abroad using the VIEs scheme won’t be affected.
The VIE is a legal structure many Chinese companies — including giants like Alibaba, Baidu and Tencent — have used for decades to evade foreign investment restrictions on overseas listings. Stateside, the SEC is also looking to restrict Chinese VIEs.
The upcoming negative list is Beijing’s latest regulatory move to rein in China’s tech industry.
China’s central securities regulator on Sunday denied a Bloomberg report that claimed China was seeking to block VIEs from listing overseas, adding that it was also not pushing companies using the structure to delist from U.S. exchanges.
Climate TRACE's data show emissions at the facility-level.Image: Climate TRACE