China restricts overseas access to corporate registry databases
Chinese financial data providers have recently stopped providing detailed information on the nation’s companies to overseas clients, underscoring the growing difficulty foreign firms face when trying to obtain data that Beijing may deem sensitive.
Wind Information Co. in recent months ended allowing clients using its platform outside mainland China from accessing its corporate registry database, according to multiple people familiar with the matter. The change is due to regulatory requirements, and other parts of their service are continuing as normal, they said, declining to be identified because the matter is sensitive.
Investors operating in China are facing a more challenging environment despite Beijing’s push to improve ties globally. U.S. consultancy firms are under the spotlight in particular, with authorities in recent weeks targeting the China offices of Bain & Company, Mintz Group and Capvision, according to media reports. The government last month passed a new counter-espionage law that expanded the list of activities that could be considered spying, intensifying the risks for foreign firms.
The move “underscores the CCP’s building of a new wall to the rest of the world,” said George Magnus, author of Red Flags: Why Xi’s China is in Jeopardy, referring to the Chinese Communist Party. “In decades of private sector and academic research, I’ve stumbled into occasional publishing problems with sensitive governments, but never come across sensitive governments shutting down or restricting access to domestic data sources.”
Wind collects data on more than 200 million enterprises and 270 million legal representatives and executives, according to its website. It has information about company shareholders and affiliates, fundraising and investing activities, legal disputes and operation risks.
Registry databases at Qichacha and TianYanCha — companies that provide similar services — have also been inaccessible for some time to users outside mainland China, according to several other people.
More than 10 overseas users of Wind contacted by Bloomberg said they could still access other data from Wind apart from the corporate registry database, and didn’t have problems renewing subscriptions to the service. The Wall Street Journal reported over the weekend that some unidentified foreign firms, including think tanks and research firms, were unable to renew subscriptions to Wind over what the company described as “compliance” issues.
Wind and TianYanCha didn’t respond to email requests sent to addresses listed on their websites. A representative for Qichacha didn’t respond to a request for comment. The Cyberspace Administration of China didn’t respond to two phone calls and a fax. The nation is still on holiday for Labor Day.
Bloomberg LP, the parent company of Bloomberg News, also offers data and information to the financial services industry.
Scrutiny of US consultancies is increasing. Police visited the Shanghai office of Capvision, the Financial Times reported on Tuesday, citing four unidentified people familiar with the matter. Bain confirmed last week that Chinese authorities questioned staff at its Shanghai office, without revealing details on the nature of the investigation. In the most extreme case so far, all five of Mintz’s local staff were detained during a raid, the New York Times reported in March.
Office Raids
The increasing pressure on foreign companies operating in China appears to run counter to Beijing’s efforts to improve diplomatic ties in the wake of the country’s reopening. Premier Li Qiang — the country’s No. 2 behind President Xi Jinping — vowed in March to establish a “broad space” for international companies to develop there. China has welcomed a host of leaders and business delegations, including from Germany and France. Last month, China’s Politburo urged greater efforts at boosting foreign investment.
Global investors have turned more cautious on the country, despite improving economic fundamentals. The MSCI China Index is down about 16% from its January peak, while MSCI Inc.’s global index is little changed in the same period.
Foreign Executives in China Ask ‘Who’s Next?’ After Bain Probe
Concern about transparency of information in the world’s second-largest economy has grown, undermining the investing case. Last October, the government postponed the release of several major economic reports, including gross domestic product figures, without providing a reason for the delay. The World Health Organization repeatedly called for China to be more open about the Covid situation within its borders.
China has tightened control over its domestic financial industry since the National People’s Congress in March, when Xi unveiled a set of reforms aimed at deepening oversight of the private sector and key strategic industries.
“The financial sector is a pivotal component of China’s national security, in President Xi Jinping’s view,” said Diana Choyleva, chief economist at Enodo Economics, a London-based research firm focused on China. “With a comprehensive regulatory overhaul approved at the NPC in March, the supreme leader aims to assume full control of China’s sprawling financial industry.”
--With assistance from Tom Hancock, Bei Hu and Charlotte Yang.