The Chinese government loves to announce major policy moves during the holidays—when financial markets are often closed—and it didn’t disappoint this year.
On Christmas Eve, Chinese regulators finally legitimized a legal loophole that has allowed Chinese tech firms such as Sina Corp., Alibaba and Tencent to list their shares overseas despite Chinese rules banning foreign ownership of domestic tech companies. The move ended more than 20 years of silence by China about the structure known as variable interest entities, in which Western and other non-Chinese investors own shares in Cayman Islands or British Virgin Islands entities set up by the Chinese companies.
