China will publish a blacklist that will make it difficult for new tech companies to raise foreign funding and list them abroad, the Financial Times reports
The blacklist is expected to be published early this month, and it will include startups in sensitive sectors, such as those that involve data use, or that raise national security concerns, and that use the so-called Variable Interest Entity Structure, or VIE.
Variable interest entities, referred to as a legal structure that is controlled by a corporation by means other than a majority of voting rights. It is used by many Chinese companies to circumvent domestic restrictions on foreign investment and raise funds internationally, and is among the giants that rely on this type of company, Alibaba and Tencent.
The newspaper said the blacklist likely won't affect companies with existing VIE structures.
The Financial Times report came on the heels of months of a regulatory crackdown on China's tech sector, with authorities aiming to rein in monopolistic behavior among big companies, as well as regulating the use of data and algorithms.
China has imposed fines on big internet companies including Alibaba and food delivery giant Meituan. Meanwhile, Didi Global Passenger Services announced, last week, that it will delist its shares from the New York Stock Exchange, less than six months after its IPO.
Earlier this year, China banned foreign investment in education companies via variable-purpose entity companies.
