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China signals further crackdown on the tech sector

By James Hester

11:50, 27 August 2021

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The company logo of Didi on a mobile phone next to a gavel and Chinese flag
Chinese flag, Didi and gavel – Photo: Shutterstock

China could block data-dependent Chinese tech firms from launching initial public offerings (IPOs) as Beijing continues its crackdown on its technology sector.

Officials at the China Securities Regulatory Commission told the Wall Street Journal that the new regulations would ban Chinese companies with large amounts of sensitive consumer data from listing in the US.

The measure is likely to affect digital and internet-based companies in particular because they rely on significant quantities of personal information.

New data security laws

In July, riding-hailing app Didi suffered a sharp sell-off after Chinese authorities told mobile app stores in China to remove the company’s software. The regulators said that they acted to protect national security and public interest due to worries surrounding Didi’s handling of customer data. The Cyberspace Administration of China is currently investigating the company.

It comes as Beijing gets ready to introduce new data security laws to crack down on how firms use sensitive data. Failure to comply with the new rules, which are due to take effect from 1 September, could result in significant fines or even criminal charges.

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Tighter rules on algorithms

Meanwhile, the Cyberspace Administration of China also issued a raft of proposals on Friday to more closely regulate the way Chinese firms use algorithms.

Kendra Schaefer, head of tech policy research at Trivium China, a Beijing-based consultancy, tweeted that “tight control” of algorithms was on its way.

In a later Tweet, Schaefer added: “Most interesting to me: Users must be provided with a convenient way to see and delete the keywords that the algorithm is using to profile them.” 

Read more: Didi post-IPO - what is next for the Uber of China

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