WeChat bans user registrations in China as China cracks down tech

WeChat announced Tuesday that it will suspend all new registrations for WeChat users until August.

WeChat (also known as Weixin) posted a short post on social media stating that the suspension is related to an upgrade to security technology “accordingly to applicable laws and regulations.”

Tencent, a Chinese tech giant, said that registrations for new WeChat public and personal accounts would be temporarily suspended. The company stated that new registrations will be resumed after the upgrade, which is expected to take place in early August.

WeChat bans user registrations in China as China cracks down tech

Weixin is an app that hundreds of millions of Chinese people use every day. They can message their friends, send photos, pay for things, book restaurants, order food, and many other services. Weixin and WeChat are used by the Chinese diaspora, including the United States. Together they have approximately 1.2 billion monthly active users.

Although it was unclear which laws WeChat was referring to in its announcement, the news comes amid a wider crackdown by Chinese regulators on technology companies and education companies that has scared investors. Tencent’s stock closed in Hong Kong down almost 9% Tuesday, the worst day for the company in over a decade.

Many tech companies, including Alibaba, were subject to investigations over alleged monopolistic behavior or violations of customer rights. This led to massive fines and overhauls. Xi Jinping, the Chinese President, has endorsed these probes and called on regulators to examine tech companies as China tightens its data privacy policies.

This week, the share prices of Chinese tech companies like Tencent, Alibaba, and Meituan, have been hit hard. Meituan closed almost 18% lower in Hong Kong Tuesday, surpassing Monday’s 14% loss. This was after Chinese regulators released new guidelines calling to improve standards for food delivery workers.

China’s Cyberspace Administration had suspended registrations for new users of ride-hailing app Didi earlier this month. This was just two days after Didi’s blockbuster New York IPO. It was the largest US share offering by a Chinese firm since Alibaba’s inception in 2014.

Although the regulator stated that the suspension was put in place to “prevent the expansion of risk” during a cybersecurity review, it did not provide any details about why the probe was initiated.

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The internet watchdog suggested that companies with data on over 1 million users should seek approval from the agency before they list their shares overseas. The agency could also request that companies submit IPO materials for review before they are approved to list.

Analysts at Nomura said Monday that the clampdown on private companies could further undermine foreign investors’ confidence and trust in China stocks. They said that “bruised and shaken investors will now be likely to consider which other areas might become the next target for expanded state control.”

By Maria Jose

Maria Jose is the Daily Reuters bestselling author. She is named as Publishers Weekly Flying Start. Maria was born and raised in Portugal. She is a bookseller before shifting to children’s publishing and has worked at a literary development company and a creative writing website for teens and as a book reviewer of children’s and young adult novels. She is tall for no reason and lives in United Kingdom.

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