Chinese Firms with Overseas Listing plans to undergo Gov Security Review

Mobile phone users in China

In a move that signifies another step towards tightening its hold on China’s technology firms, the government said that it chalk out new rules on local platform firms which plan to list in the overseas stock markets.

The Cyberspace Administration of China (CAC) said the new rules come into effect on February 15 and requires platform companies with data on more than 1 million users to undergo a security review before listing their shares overseas, according to a Reuters report. “With stock market listings there is a risk that key information infrastructure, core data, important data or a large amount of personal information could be impacted, controlled or maliciously used by foreign governments,” said the CAC in a statement. This is expected to impact a range of companies, such as TikTok, e-commerce giant Alibaba Group and other smaller companies.

Algorithms to be governed

This development needs to be seen in conjunction with CAC’s joint plan with eight other departments to set up governance rules and a system for algorithms in the next three years, in order to avoid the risk of abuses such as interference in public opinion, attacks on business rivals and harm to netizens’ rights and interests. “A multi-dimensional regulatory system will be established to monitor algorithm safety risks, archival administration and illegal behaviour,” said a statement published on the CAC’s website.

This was put in place after CAC solicited public opinion on a new draft of rules for algorithm management in August 2021, which required algorithm service providers not to use algorithms to block information, manipulate ranking lists or search results, control searches or selection, forge likes and comments, or hijack online traffic, according to a report in Global Times. China captured about 23.07 million samples of rogue programs in the first half of 2021 that infected about 4.46 million main machines during the period, up 46.8 per cent on a yearly basis.

Further, according to the information recorded on China National Vulnerability Database, around 13,083 new general security loopholes in the first half of this year, up 27.9 percent when compared to the same period. Last year, there was an estimated 20,704 such loopholes.

The document was released on the first day of the 2021 World Internet Conference Wuzhen Summit, China’s largest internet industrial expo, in Wuzhen, East China’s Zhejiang Province. Further, China has rolled out guidelines to regulate the country’s booming livestreaming marketing industry and set standards for livestreaming e-commerce platforms, operators and hosts.

The new measures, jointly issued by the Cyberspace Administration of China and six other government entities, including the Ministry of Commerce, the Ministry of Culture and Tourism and the State Administration for Market Regulation, aim to protect the rights and interest of consumers and tackle problems, including false advertising and goods of poor quality.

They require livestreamers and operators to be at least 16 years old, and minors under 16 must obtain the consent of a legal guardian.

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