Beijing March 26:- As part of the broader strategy of the Chinese Communist Party (CCP) to increase State ownership of private companies and to strengthen the Party’s influence, the State-backed firms and regulators are obtaining stakes and representation on the board in technology companies, media reports said.
State-owned firms and regulators like China’s Cyberspace Administration are obtaining the so-called ‘golden shares’ in private companies, especially internet/technology firms holding large amounts of data and operating critical information infrastructure.
‘Golden shares’ are types of shares that give special powers to the shareholder like veto power over changes to the company’s charter, and even the ability to block other shareholders from holding more than a particular ratio of the company’s ordinary shares.
The CCP is particularly focused on Chinese private companies that are listed in the US, such as the digital freight company ‘Full Truck Alliance’, social media firm ‘ByteDance’ and the online audio platform ‘Ximalaya’, the reports said.
Most of the companies have accepted the “golden share” arrangement to avoid sanctions by the Chinese regulators or in lieu of preferential treatment while applying for licenses.
China first began using golden shares in 2016 to enhance its discreet monitoring of business operations and to influence the decision making of the companies.
The recent uptick in the use of golden shares by CCP is intended to establish a direct oversight of internet companies’ collection, use and storage of consumer data, in accordance with the Data Security & Personal Information Protection laws enacted in the country last year.
The move is also motivated by the CCP’s vision of achieving a more socialistic economy as part of its “common prosperity” goal.
The CCP has been implementing its vision by “cutting to size” giant private firms and individuals who lead them, with Jack Ma’s disappearance for weeks being the most prominent recent example.
