China’s online ride-hailing giant Didi Chuxing (Didi) announced on Dec. 2 it was delisting from the New York Stock Exchange and moving to Hong Kong, after being placed under four months official investigation. Didi’s withdrawal is linked to China’s secrecy toward data, as well as new stringent U.S. regulations involving Chinese companies on the stock market.
Didi’s abrupt change, according to experts, was done under the duress of Chinese Communist Party (CCP) scrutiny.
Before the delisting, Beijing had already begun investigating Didi under new cybersecurity laws coming into effect as Didi was joining the market.
On June 10, Beijing imposed the National Data Security Law, then a month later on July 10, issued a draft on cybersecurity censorship regulations. The regulations require that “operators with personal information of more than one million users who go public abroad must report to the cybersecurity censorship office for approval,” according to state-owned media People’s Daily.
Didi falls into that category.
The Chinese regime began surveilling the company several days later on July 2. Two days later, Didi’s app was taken down. Then officials took down 25 apps related to Didi on July 9. On July 16, seven departments jointly overtook the investigation into Didi.
The U.S. jurisdiction includes inspection from the PCAOB, which China and Hong Kong “historically” do not comply with, according to SEC chair Gensler.
Costello added that he expects almost all of the U.S.-listed Chinese technology companies will be relisted in Hong Kong or on the mainland.
China’s current security law stipulates that foreign securities supervisors cannot investigate and gather evidence in China, and any entity or individual cannot provide documents related to securities business activities outside of China.
The CCP may deny other large Chinese companies with sensitive big data to the New York Stock Exchange, Zhang Chengyu, the vice general manager of Beijing-based Shiji Hongfan Asset Management Co., told Reuters on Dec. 3.
