SHANGHAI: SpaceX’s decision to bar Chinese mainland and Hong Kong investors from its US$75bil initial public offering (IPO) underscores a growing global trend of technology decoupling, which Chinese companies must heed without altering their global outreach, say experts.
Underwriters for SpaceX, the space exploration company founded by Elon Musk, said last Friday that they are instructed to reject any orders originating from the Chinese mainland and Hong Kong, according to people familiar with the matter.
It means that mutual funds, private equities, sovereign funds, family offices and high-net-worth individuals from the two jurisdictions will all be blocked from this highly anticipated IPO, which would rank among the world’s largest technology listings in history.
Online access to the official website of SpaceX and its roadshow materials were inaccessible in the jurisdictions on Tuesday.
SpaceX has cited the US International Traffic in Arms Regulations for making the decision, indicating national security concerns.
But Dai Guanchun, a senior capital markets lawyer based in Beijing, said that there is no explicit restriction under US law.
The subscription of shares does not pose any serious national security or technology leakage risks, he stressed.
“This reflects an excessive politicisation of technological exchanges by the United States, disrupting the normal flow of international capital,” he said.
“Chinese companies possess world-class innovation capabilities, and Chinese scientists play critical roles in nearly all areas of technological innovation.
“Excluding Chinese companies and Chinese capital is unjust, undermining long-standing international trust and collaboration,” he added.
But Dai stressed that this could be an unavoidable trend. Not just the United States, but probably Europe may also impose excessive politicisation on technology and capital exchanges.
Against that backdrop, Chinese companies should not be conservative, but rather seek more cooperation in other markets, he added.
Excluding investors from the Chinese mainland and Hong Kong from this IPO is using military export controls as a pretext.
It is a selective capital isolation driven by geopolitical competition, as explained by Liu Chunsheng, an associate professor of international economics at the Central University of Finance and Economics.
“It is a case of capital decoupling in cutting-edge technology sectors. — China Daily/ANN
