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Tuesday, June 28, 2022

THWARTING US REGULATORS #278

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Graham Perry
Experienced Arbitration Lawyer | China & Chinese Business Affairs | Public Speaker/Lecturer.

GOOD MORNING FROM LONDON

Does China need US Capital?

Didi Chuxing, a popular taxi company pressed forward with its $4.4bn US public offering just as the Party in China was preparing the 100th anniversary of the founding of the Party. The Party’s worry? The Didi initiative offered US Regulators access to key customer data about Didi – and all other Chinese companies that raise money on Wall Street.

The Cyberspace Administration of China, the country’s internet regulator, intervened + instructed Didi to stop growing its business in the US. When share trading in the US re-started, Didi’s shares in the US had fallen 20 per cent. At the same time China’s State Council + the Party published new rules for greater scrutiny of overseas IPOs. Details of the new China initiative will follow but Chinese technology companies will no longer be so free to list shares overseas.

Wall Street is not essential to China going forward. China can raise funds in China which, today, is stronger + more self-reliant. China does not need its top companies to go to the US to fund their growth plans.

Beijing is telling Sina Weibo, (which operates China’s equivalent of Twitter), + Alibaba + Didi that New York listings are bad for China. Arch anti-China hawk Mark Rubio hoped that US legislation that would force Chinese companies to open their books to US regulators as provided by Donald Trump + the Public Company Accounting Oversight Board.

But Alaska has happened + the words of State Councillor Yang Jiechi have been heard. China is standing up. But China wants co-operation not confrontation. It will stand its ground but it prefers jaw-jaw to war-war. What does the West prefer?

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