Editor’s note for Monday, July 12, 2021

My thoughts today:

Car-hailing giant Didi Chuxing, as we reported a week ago, was placed under investigation by the government for data security issues two days after its IPO, causing its share prices to drop 20%. Then reports emerged of new rules governing variable interest entities (VIEs), the legal vehicles that Chinese companies use to list on foreign stock exchanges.

Is this the beginning of a Great Financial Decoupling, as predicted by Anthony Lawrence on The China Project last Friday? Or was the Didi debacle a manifestation of weaknesses in regulatory coordination, rather than a sign of a sea change in China’s financial environment?

I personally think the Didi post-IPO takedown was a sign of a significant change in the way Beijing handles tech companies and their foreign funding and ownership, and this is part of an intentional clawback of financial and jurisdictional power by Beijing. But like everything in China, the situation is not easily characterized in broad strokes. On The China Project today, Paul Triolo and Michael Hirson lay out the context and implications of the Didi affair, and argue against reading it as the start of a real decoupling.

Berlin-based think tank MERICS “wants to shine a light on the many excellent young female, non-binary and young transwomen talents in the European China research community” and is calling for applications for its European China Talent Program, 2021 Special Edition for Young Professional Women.

Our word of the day is “sent away with a warning” (予以警告驱离 yǔyǐ jǐnggào qūlí) which is what a spokesperson for the Chinese People’s Liberation Army said it had done to a U.S. warship that sailed past the Paracel Islands yesterday — see today’s top story for details.

—Jeremy Goldkorn, Editor-in-Chief