Chinese Premier Li Keqiang voices support for tech listings as China-US audit deal remains in limbo

China will support online platform companies and digital economy enterprises to raise capital in domestic and overseas markets, Li says
Plans by Chinese tech companies to go public in New York have largely stalled after Beijing launched a probe into Didi Global

IPO

Jiaxing Li

Published: 9:00pm, 19 May 2022

Why you can trust SCMP

Chinese Premier Li Keqiang has broken his silence to voice support for the country’s tech firms to go public at home and abroad, echoing the views expressed by Vice-Premier Liu He this week at a high-level meeting chaired by China’s top political advisory body chairman Wang Yang.

China will support platform companies and digital economy enterprises to raise capital in domestic and overseas stock markets “in accordance with relevant regulations and laws”, Li said on Wednesday at a symposium with local government heads from 12 provinces, including Guangdong and Zhejiang.

This is the first time that Li, the second most powerful official in China’s Communist Party, has publicly commented on Chinese companies’ hopes to go public overseas since Beijing tightened listing rules and launched data security investigations into several firms last year.

Li also said the government would create a stable, transparent and fair regulatory and business environment for the platform and digital economy, and keep opening up cross-border trade and welcoming foreign capital.

China to end tech clampdown as economy slows: sources

The symposium took place during Li’s tour of the northwest province of Yunnan to collect views on how to restore economic activities amid rigid Covid-19 control measures.

Covid-19 lockdowns in Shanghai and beyond, as well as regulatory tightening by Beijing over the past 18 months, have hit Chinese tech companies hard.

Social media and video gaming giant Tencent Holdings reported nearly zero revenue growth for the first quarter, its weakest performance since going public in 2004, while e-commerce giant JD.com posted 3 billion yuan (US$444 million) in losses for the same period.

But there are signs that Beijing’s 18-month crackdown on the domestic tech industry, which wiped trillions of dollars of market value from company stocks and dampened investor confidence, is coming to an end.

Liu, the top economic aide to President Xi Jinping and head of China’s finance development committee, said in March the government would continue to support “all types of enterprises” to go public overseas, and promote the healthy development of internet platforms.

A 25-member Politburo meeting at the end of April chaired by Xi and attended by Li, Liu and Wang, agreed that China would roll out concrete measures to help internet firms, signalling the official end to the regulatory storm.

At a special session hosted this week by the Chinese People’s Political Consultative Conference, the country’s top political advisory body, Liu said China would support digital enterprises to list at home and abroad.

Will China’s Big Tech crackdown ease? Top advisory body meeting offers hope

Plans by Chinese tech companies to go public in New York have largely stalled after Beijing launched a probe into ride-hailing giant Didi Global last summer. The Cyberspace Administration of China, an internet regulator which previously had no say in financial matters, has since demanded all tech firms to complete a cybersecurity review before listing overseas if they hold the data of more than a million Chinese consumers.

Meanwhile the US Securities and Exchange Commission has threatened to delist firms whose audit books cannot be reviewed by the US Public Company Accounting Oversight Board, presenting a huge uncertainty for Chinese firms listed in the US and prompting Chinese authorities to seek compromise with Washington.

Chinese officials, including Liu, said regulators on both sides had achieved progress over the matter, but it remains to be seen when an agreement can be reached.

While China appears to be ready to dial back some of the harsh measures that have bogged down business activities in the tech sector, it would take some time for the supportive signals to translate into real impact, said Martin Lau Chi-ping, president of Tencent, at a conference call with analysts on Wednesday.

“We will work closely with regulators in the hope of seeing this transition happen,” he said.