China plans to create a three-tiered classification system to group Chinese companies listed on US stock exchanges based on the type of data they hold, Financial Times reported on Saturday.
The system will also require companies to allow regulators to audit their files in an attempt to bring them into compliance with US regulations. By doing so, Beijing hopes to stop US regulators from delisting hundreds of Chinese firms.
The companies will be sorted into three categories: Firms with non-sensitive data, firms with sensitive data, and firms with secretive data. Further details about the categories are not yet known.
Washington has long asked for unfettered access to data held by Chinese companies operating and being publicly traded in the US, but China has been hesitant to offer that, citing national security concerns.
In April, Reuters reported that Chinese regulators were working on a framework for an agreement that will allow Chinese companies to remain listed on US stock exchanges. The previous month, Reuters also reported that Beijing warned some companies, including Alibaba, Baidu, and JD.com to prepare for increased audits.
Chinese companies holding private data and accessing corporate secrets have been an ongoing issue in the US. Earlier this month, Senators asked the Federal Trade Commission to investigate TikTok’s alleged descriptive data privacy practices. Last week it was reported that ByteDance, the parent company of TikTok, had significantly increased its lobbying spending in Washington.
The Canadian government also joined the other members of the five-eyes group in banning Huawei and ZTE from being used to develop the nation’s development of 5G networks.
Reuters was not able to reach the Chinese Securities Regulatory Commission for comment.