China is continuing the regulatory storm triggered by Didi’s US initial public offering (IPO). A new draft proposal by the Cyberspace Administration of China (CAC) – China’s primary internet regulator – requires companies that hold personal data of over one million users to go through additional cybersecurity reviews before listing abroad.

The “Cybersecurity Review Measures”, published on the official website of the CAC on Saturday, aims to protect “national security” and to ensure the security of critical information infrastructure supply chains.

“Critical information infrastructure operators, purchasing network products and services, and data processors carrying out data processing activities that affect or may affect national security shall conduct network security reviews in accordance with these measures,” the proposal said.

The country’s internet watchdog shocked investors last week when it suddenly launched a cybersecurity review into Didi Chuxing – China’s main ride-hailing app – two days after it debuted in New York.

Soon after, it conducted similar investigations into Full Truck Alliance and Zhipin.com which both recently listed in the US. The government subsequently announced that it would take tougher regulatory actions against Chinese companies trading overseas – particularly tech companies listed in the US.

The draft proposal also covers data security risks involving foreign powers, as it aims to review the threat of information being transferred abroad illegally, or being stolen, leaked or destroyed.

How well do you really know your competitors?

Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.

Company Profile – free sample

Thank you!

Your download email will arrive shortly

Not ready to buy yet? Download a free sample

We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form

By GlobalData
Visit our Privacy Policy for more information about our services, how we may use, process and share your personal data, including information of your rights in respect of your personal data and how you can unsubscribe from future marketing communications. Our services are intended for corporate subscribers and you warrant that the email address submitted is your corporate email address.

The new review measures will also take into account the national security risks of critical information infrastructure. It will check whether personal or critical data is being affected, controlled or maliciously used by foreign governments after listing abroad.

The proposal did not mention whether Chinese tech firms already listen in the US will have to go through the same cybersecurity review.

Laws currently applicable came into effect in June 2020, which require that critical information infrastructure operators go through cybersecurity reviews if they acquire network products or services that are deemed a risk to national security.