Didi Global Inc. has secured the green light to resume signing up new users, suggesting the worst is over for a ride-hailing giant that symbolized Beijing’s bruising campaign to rein in its powerful internet industry.
The widely anticipated decision is one of the clearest signs yet that Xi Jinping’s administration, keen to jumpstart an economy that’s sagged under three years of Covid Zero restrictions, sees a need for private sector’s support in that broader campaign.
Beijing is again allowing Didi to bring in new users for the first time since regulators removed its main apps from stores in 2021, the company said in a statement on its official Weibo page. That suggests the services will soon return to Apple and Android stores.
Didi, once feted as the national champion that drove Uber Technologies Inc. out of China, was among the highest-profile companies at the heart of a clampdown on the internet industry that Beijing initiated in 2020, when it abruptly halted Ant Group Co.’s IPO. Regulators cracked down on Didi’s business in 2021 after the company pushed ahead with a US$4 billion-plus US initial public offering against Beijing’s wishes.
Relaunching the apps is a prerequisite for Didi to resume business as usual, and to eventually work toward listing its stock in Hong Kong. It also suggests the government is serious about easing up on giants from Alibaba Group Holding Ltd. to Tencent Holdings Ltd., including by approving the most significant crop of blockbuster titles since clamping down on gaming addiction.
“The relaunch of Didi apps supports earlier indications from Beijing that required reforms within local technology sector are near-completion,” Bloomberg Intelligence analyst Catherine Lim said. “Disruptions to the operations of tech giants such as Alibaba, Tencent should be minimal in 2023.”
See also: China tightens securities lending rule to support stock market
It’s unclear when Didi’s apps would actually reappear for download. One possibility is they could emerge just before the typically busy Lunar New Year celebrations, when rides usually peak.
The return of Didi’s apps would be a milestone in Beijing’s preparations to loosen its grip on the country’s giant internet sector. Guo Shuqing, party secretary of the People’s Bank of China, said this month the regulatory overhaul was drawing to a close. That, coupled with a post-Covid Zero reopening and thawing tensions with the US, has led to a flurry of price target upgrades across the sector.
A long-awaited virtual reappearance of Didi would also remove some of the uncertainty that wiped out most of its value and forced it to trade on pink-sheet markets reserved for higher-risk securities. Beijing fined the company more than 8 billion yuan (US$1.2 billion) at the conclusion of a year-long investigation into what it called serious violations of national security.
See also: Eight reasons why I am still in favour of China stocks
The ferocity with which regulators cracked down on Didi — including forcing it to delist just months after the highly touted New York IPO — spooked investors and underscored the extent to which Beijing was willing to punish even its most celebrated firms. Didi itself had won the backing of tech giants including Tencent and Uber, and capital from a host of finance powerhouses from SoftBank Group Corp. to Blackrock Inc.
It remains unclear under what conditions regulators would allow Didi to resume work on a new listing. Didi’s case was filed to the Cyberspace Administration of China earlier and talks between the company and regulators have gone smoothly, according to people familiar with the matter, asking not to be identified discussing a sensitive matter.
More than two dozen Didi apps, including those for riders and drivers, were suspended from download around July 2021, when the government accused the Beijing-based firm of violating personal information protection rules. New user registration in China had been suspended since.
“In the future, the company will take effective measures to guarantee the security of our platform infrastructure and big data, and maintain national cybersecurity,” Didi said in its statement.
