China is tightening restrictions on businesses seeking to go public overseas amid a wave of Chinese origin IPOs in the US. Regulators have thrown down the gauntlet for local companies by announcing new privacy rules for those seeking foreign stock market listings, according to Reuters. As a result, any company that has data on more than a million customers must face a review into how they handle that info in order to receive permission for a foreign IPO.

Regulators will scrutinize the risks of said data being being affected, controlled or manipulated by external governments following overseas flotations. In a broader effort to get companies to list locally, China is adding the two sets of rules that focus on data collection and data storage to its Data Security Law and the Personal Information Protection Law.

The constraints arrive in the midst of a privacy crackdown by Beijing. Regulators have previously rattled their sabres at TikTok and LinkedIn for alleged data collection violations. Just last week, authorities caused shockwaves by ordering ride-hailing giant Didi to remove its app from mobile stores in the wake of its US listing, causing its shares to initially plummet by 20 percent.

With US-China tensions still simmering, the decision will likely pile pressure on President Biden to increase scrutiny of Chinese businesses. Hostility created by Trump-era policies has eased in recent months after the removal of China’s Xiaomi and Luokung Technology from military blocklists, which prevented Americans from buying and holding their shares. An expected thaw in relations under Biden likely fueled a recent surge in Chinese company listings. Last year, China-based businesses raised $11.7 billion through 30 IPOs in the US, with even more flotations occurring this year.

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