Decoupling, or decoupling of economies. It has been rumored for some time, but so far traces of a possible commercial iron curtain had only been glimpsed in the technology sector. Now, however, something seems to be able to change, also invading the financial field. Even if, looking at the data, the interconnection between Chinese companies and Wall Street has, if anything, strengthened in recent times, while outside the commercial, technological, diplomatic, geopolitical and now with Biden even ideological war raged.
Another 34 Chinese companies risk the stop for IPOs on Wall Street
Yet the story of Didi Chuxing is exemplary. And it is not the only one, given that there are 34 other IPOs of Chinese or Hong Kong companies waiting for the green light on Wall Street. Following the model of dual circulation, announced by Xi Jinping last autumn during a crucial trip to Guangdong, Beijing wants to keep capital, ideas, energy and data in the “small circulation”, the internal one. And the “great circulation”, the external one, counts less and less or at least we try to make it count less and less. Self-sufficiency goal, even at the cost of losing (a lot of money).
China tightens rules for overseas quotations
Indeed, the Chinese government intends to tighten the rules for companies wishing to go public abroad. The Council of State is working on new measures “on data security, the flow of cross-border data and the management of other confidential information”. The new guidelines were officially introduced to address the “profound changes in the economic and financial environment”, given that the current procedure required for IPOs abroad was formulated back in 2005, when China was not still the colossus of today.
But in reality, Chinese prices in the US are increasing
In fact, there are currently 248 Chinese companies listed in the United States, 36 more than a year ago. And this is the most significant increase since 1995, basically prehistoric when you consider how much the Chinese market and economic ecosystem have changed since then. But now tensions with Washington and Beijing’s need to keep capital within the country are rapidly changing the landscape. And it is no coincidence that the squeeze comes as the United States works on stricter laws on the auditing process that threaten to expel defaulting companies. Especially the Chinese ones. The message is clear: don’t go overseas but in China.
The Chinese government wants the data from the platforms
The planned measures could have far-reaching implications for many of China’s big techs aiming for internationalization. Among these, in addition to Didi, Boss Zhipin, Yunmanman and Huochebang were also affected. In the background, there are actually very internal motivations as well. The government has decided to no longer leave the monopoly of data management to large private platforms. This is why, after Ant Group, Didi (which has over half a billion users) also ended up in the crosshairs of the party-state.
The political reasons behind the stop at Didi & co.
Then there is a political aspect. The government cannot and does not want to allow the slightest hope about the possibility that big techs can slowly transform themselves from centers of economic, technological and data power into centers of political power or in any case become the spokesperson for political instances that can in some way bring difficulties the Party. Better the stick, always. Also to get in a better negotiating position, hitting (more than) one to educate (more than) a hundred.