A curious aspect of the U.S.-China tech dispute is that, even with two governments at their throats, tech investors have been content with a warm and mutually beneficial embrace.
At least until now. The sharp fall of Chinese rideshare giant Didi just days after its $ 4.4 billion New York IPO is likely to put a lasting damper on new Chinese listings in the United States, realizing the kind of financial decoupling, at least in stocks, which the Trump administration has been unable to reach. Amid an intensifying regulatory storm across the country, Didi shares are now trading at around 70% of their opening price on the June 30 IPO day.
On Thursday, the Wall Street Journal reported that China’s Cyberspace Administration, which reports to a central management group chaired by Chinese President Xi Jinping, will be responsible for overseeing overseas registrations.
What is currently happening in Chinese internet technology has several aspects: politics, legitimate regulatory concerns about market power and data privacy, and an increasingly tough Chinese industrial policy that views data as a sovereign resource and is also increasingly skeptical of the usefulness of mainstream Internet businesses. compared to hardware applications like microchips.
From an investor perspective, the crucial point to remember is that these three elements are now opposed to mainstream Internet businesses. Anyone who engages in a Chinese internet technology IPO or hopes this crackdown turns out to be transient is taking a huge risk.