China’s cyberspace regulator has drafted new guidelines that would require the country’s large Internet companies to obtain its approval before they undertake any investments or fundraisings, sources familiar with the matter said yesterday.
The proposed requirements from the Cyberspace Administration of China would apply to any platform company with more than 100 million users, or with more than 10 billion yuan (US$1.58 billion) in revenue, they said.
Any Internet firm involved in sectors last year named on the Chinese National Development and Reform Commission’s negative list would also need to apply for an approval, the sources said.
Photo: Bloomberg
The sources declined to be identified as the information was not yet public.
The regulator did not immediately respond to a request for comment.
The proposed rules are the latest by China’s increasingly assertive regulators, who have over the past year reined in the country’s formerly freewheeling Internet giants in areas from dealmaking to their handling of user data.
This year, the cyberspace regulator issued a new set of rules, to take effect from Feb. 14, that require platform companies with data on more than 1 million users to undergo security reviews before they list overseas.
Separately, China is drafting nationwide rules to make it easier for property developers to access presale funds held in escrow accounts in its latest move to ease a severe cash crunch in the embattled sector, four people with knowledge of the matter said.
“An abrupt clampdown on escrow accounts by local authorities after China Evergrande Group’s (恆大集團) crash choked liquidity for some good-quality names. A correction by the central government is much needed,” said Nan Li (李楠), associate professor of finance at Shanghai Jiao Tong University.
The new rules would help developers meet debt obligations, pay suppliers and finance operations by letting them use the funds in escrow that are controlled by municipal governments with no central oversight, the people said on condition of anonymity due to sensitivity of the matter.
Guided by the Chinese Financial Stability and Development Committee, the Chinese Ministry of Housing and Urban-Rural Development and other agencies are drafting the new rules, three of the people said.
Beijing aims to roll out the new rules by as early as at the end of this month, they added.
The property sector accounts for about one-quarter of China’s economy, the world’s second-largest after the US.
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