One of China's most powerful regulators has been tasked with overseeing all overseas initial public offerings, a report by The Wall Street Journal said. Sources with knowledge in the matter said the Cyberspace Administration of China will be taking the lead role in policing all international listings.
The agency, which was established by Chinese President Xi Jinping to regulate the internet, will be the leading agency to head the country's push to tighten its rules for future international IPOs. Analysts said the agency's recent actions against Didi Global may just be a precursor to future actions it might take against Chinese companies seeking to list abroad.
Analysts said giving the CAC the power to regulate overseas listings might not be in China's best interest given its lack of coordination with other regulators. While the CAC had moved against Didi after its blockbuster IPO in the U.S., economic and financial regulators were largely supportive of the deal.
Analysts said the increased power of the CAC over Chinese corporations could accelerate the decoupling of the U.S. and Chinese financial markets. The rift between the financial markets had already worsened because of the stance of some American politicians. This includes politicians such as Sen. Marco Rubio, who have stepped up to block Chinese companies from going public in the U.S.
"The cyber regulator has become the new securities regulator. Investors and companies will find it much harder to manage the listing process," Victor Shih, a professor of political economy who focuses on Chinese policies at the University of California, said.
Among all the regulating agencies in China, the CAC is a relative newcomer. The agency, which was set up by Xi with the mandate of ensuring that the nation is protected from foreign digital interference or influence, was formed in 2014 - two years after he rose to power.
The formation of the agency was partly because of the 2013 leak of classified information by former Central Intelligence Agency employee Edward Snowden. Analysts said China was spooked by the incident, which showed how easily information on Chinese citizens or companies could fall into the wrong hands.