Beijing’s recent crackdown on ride-hailing giant Didi Global shows that the overriding priority of the communist regime is control, according to China expert Gordon Chang.
On July 2, the Chinese regime’s internet regulator ordered the company to stop signing up new users, pending a security review process. This came just two days after Didi began trading on the New York Stock Exchange, raising $4.4 billion in one of the largest U.S. initial public offerings (IPOs) of the past decade.
Since then, Chinese authorities have pulled the company’s apps off mobile stores and fined it for failing to report past merger deals. Meanwhile, its shares have plummeted, trading at 12 percent below their original stock value as of Thursday.
For Chang, the timing of the move right after Didi’s IPO amounted to theft. “This is thievery because they could have done this before the IPO,” he said.
“Those who bought into Didi Global ... suffered losses because of what China did.”
The ride-hailing platform isn’t the only company facing the wrath of the Chinese regime. China’s cybersecurity regulator on July 5 moved against more Chinese technology companies that had recently been listed in New York—two trucking-hailing apps and one online recruitment app.
On July 10, the internet regulator moved towards requiring domestic tech companies to undergo security reviews before listing its shares overseas.
Analysts say that Beijing’s clampdown reflects its increasing fears that data-rich tech companies may expose sensitive data to foreign governments if the company lists overseas.
Chang said the developments should trigger a major rethink by Wall Street about investing in Chinese stocks. This should especially be the case, he said, given that the regime scuttled the massive planned IPO of Ant Group, the fintech affiliate of Alibaba, when regulators announced an investigation into its lending practices days before it was due to list in Shanghai and Hong Kong.
The business community has had a longstanding interest in expanding relations with China, Chang said. “There’s always this hope that China is going to produce profits.”
But Chinese leader Xi Jinping is moving the country in another direction, he said, adding that Xi wants the the financial markets and other sectors to be under the regime’s thumb.
“For him, the Communist Party must be in absolute control of society, and then he must be in absolute control of the Party.”
