Cybersecurity review for some Hong Kong IPOs proposed by China

On Sunday, China’s cyberspace agency recommended requiring companies seeking Hong Kong stock exchange listings to submit for cybersecurity inspections if they handle data that’s sensitive to national security.
The Cyberspace Administration of China stated in the proposed rules that large online platforms aiming to establish headquarters, operational, or research centers outside of China should also submit a report to regulators. The document, which was posted on the regulator’s WeChat account website, advocates for demanding public feedback when internet platforms are developing privacy policies or revising rules that could have a major impact on user rights and interests.
Changes would need to be assessed by third-party agencies and approved by the government for companies with more than 100 million daily active users. Companies that provide instant messaging services should avoid precluding users from accessing or moving files to other Internet platforms unless they’ve good justification, according to the regulator.
The suggestions, which are up for public comment until December 13, come as Beijing tightens its grip over the country’s technology sector with restrictions on how companies should manage massive troves of data, treat consumers, and engage with competitors. China is attempting to establish governance norms for how companies utilize algorithms, having recently established regulations on data security and personal information protection. It has also asked companies to abandon a long-standing practice known as “walled gardens,” which blocks challengers’ links and services from being shared on their platforms.
Just days after suspending the initial public offering of ride-hailing giant Didi Chuxing (DIDI.N) over alleged data abuses, the government proposed in July that companies with data for more than 1 million users suffer a security review before listing shares overseas.