Chinese regulator denies data strategy report to avoid US delistings

After a report appeared in The Financial Times, the China Securities Regulatory Commission (CSRC) downplayed the allegations that China is planning to operate a three-tier data strategy with the aim of avoiding US delistings.

The system detailed in the reporting said that China was intending to sort Chinese companies into three groups ranked on the sensitivity of the data they hold.

This move was said to have been made to stop US regulators from mass-delisting hundreds of Chinese firms. In a statement, the CSRC said: “Enterprises are required to comply with relevant national data information management laws, rules and regulatory requirements of the place of listing, regardless of whether they are listed domestically or overseas.”

These comments come after several months of US-China negotiations that ended in failure, with the US calling for Chinese businesses to provide comprehensive audit files or face being delisted in 2024. China currently refuses to meet this demand, as they say national security concerns supersede the request.

If the delisting happens, more than $1 trillion of shareholder value will be impacted and several major Chinese firms, including tech group Alibaba and social media platform Weibo, could be forced to leave the New York stock exchange.

A total of more than 270 Chinese firms listed in the US are at risk of being delisted if negotiations are not successful. Bipartisan legislation is going through the US Congress that would see the 2024 date being moved to 2023, leaving even less time for the countries to make a deal.

Chinese negotiators have said both they and the US side are committed to finding a way to adequately address this issue but US Securities and Exchange Commission Chairman Gary Gensler said that he was not confident a deal would be made in time.