China is redrawing the legal gray zone that underpinned its tech giants’ rise

The Chinese government is cracking down on its largest technology firms through a series of proposed new rules tightening state control over companies’ access to capital. The Cyberspace Administration of China, the government’s internet regulator, has proposed new rules changes about overseas listings.

The proposed changes take aim at the very mechanism that led to the rise of many of its largest tech successes like Alibaba, Baidu, and Weibo: the variable interest entity (VIE) corporate structure, through which firms set up offshore shell companies through which they can attract foreign investors.

What is a VIE?

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