China to wrap probe into Didi this week, WSJ says

CHINESE regulators are preparing to wrap up their investigation into Didi Global Inc and restore the ride-hailing giant’s main apps to mobile stores as soon as this week, the Wall Street Journal reported.

Regulators are also finishing up their probes into data security at two other firms, Full Truck Alliance Co and online recruitment platform Kanzhun Ltd, the Journal said, citing unidentified people familiar with the discussion. Agencies including the Cyberspace Administration of China told executives from the 3 companies of their plan during meetings last week, the Journal added.

The 3 companies are expected to face financial penalties, including a relatively large fine for Didi, the report cited its sources as saying. All three will also offer to transfer 1 per cent of their shares to the state, giving officials greater say in running the business, the Journal reported. Didi representatives didn’t immediately respond to requests for comment.

Didi surged about 50 per cent in pre-market trading in New York, and the Hang Seng Tech Index gained 4.6 per cent in Hong Kong. Investors have been awaiting the outcome of the probe into Didi, launched in July after the ride-hailing firm proceeded with its US$4.4 billion US IPO despite Beijing’s objections. 

The ride-hailing giant shed US$70 billion of market value at one point, after regulators suspended its apps from stores, imposed curbs on overseas listings and tightened up on Didi’s industry in the wake of its June 2021 IPO. The company, once feted as the national champion that drove Uber Technologies Inc out of China, has since come to symbolise the extent to which Beijing is willing to go to curb the power and influence of its most successful Internet corporations.

The Journal’s report coincides with expectations that the government is pumping the brakes on its year-long crackdown on tech, to avoid further damaging the economy.

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It’s unclear how that would affect its delisting or future IPO plans. Didi has secured the blessing of shareholders to delist from the New York Stock Exchange soon — allowing the company to begin preparing for a Hong Kong share float, the best outcome investors have said they can hope for. BLOOMBERG