Where Have All the Chinese I.P.O.s Gone?

There was a time when a Chinese internet company’s initial public offering was the hottest thing on Wall Street.

As the e-commerce giant Alibaba prepared to go public on the New York Stock Exchange a decade ago, the world’s biggest banks competed fiercely to underwrite the offering. When the opening bell rang on Sept. 19, 2014, stock traders cheered, wearing hoodies in Alibaba’s signature orange over their suits. The I.P.O. raised $25 billion, the biggest listing ever at the time. Scores of other Chinese companies raised billions in the United States over the next few years.

Those days are firmly in the past. Wall Street has not seen anything close to a blockbuster Chinese I.P.O. in three years. In fact, the drought is getting worse. So far this year, Chinese companies have raised about $580 million in U.S. listings, almost all of it last month from one I.P.O. by the electric vehicle maker Zeekr.

As the geopolitical relationship between China and the United States has deteriorated, it has become increasingly difficult for Chinese companies to find a foreign market where a listing might not be jeopardized by political scrutiny.

Things are hardly looking better in China. As part of a push by Beijing to assert greater control over the Chinese market, regulators have made it harder to go public, drastically slowing the pace of domestic listings. Around 40 Chinese companies have gone public at home this year. They have raised less than $3 billion, a fraction of the value typically raised by this point in the year, according to data from Dealogic.

If the current pace continues, this year will bring the fewest Chinese initial public offerings worldwide in more than a decade.

The slowdown is a major shift from a period when multibillion-dollar listings by Chinese tech companies helped fuel a Gilded Age of private business in China. The former bounty in public listings reshaped how start-ups raised money, attracting more private capital from outside China while allowing foreign and domestic investors to move money out of the country.

The shift shows how China’s top leader, Xi Jinping, has remade private business, bringing it firmly under government and Chinese Communist Party control. Officials have forced successful companies off the public stock markets, jailed entrepreneurs and abruptly barred booming industries from making profits.

“A lot of these uses of capital that were going through the private sector and the stock market were a potential risk to the party’s influence,” said Andrew Collier, managing director of Orient Capital, an economic research firm in Hong Kong.

The uncertainty generated by Mr. Xi’s crackdown has wiped billions of dollars in value from China’s tech industry and prompted U.S. venture capital firms to sharply roll back their investments in China.

At the same time, Chinese companies are uncertain about the scrutiny they could face if they try to go public in the United States as tensions escalate between Washington and Beijing. “Nobody really wants to test the waters,” said Murong Yang, managing director at Future Capital Discovery Fund in Beijing.

In February, after reports that Shein, the Chinese-founded online shopping company, sought to go public in the United States, Senator Marco Rubio urged the head of the Securities and Exchange Commission to block the listing if the company refused to share information about ties to the Chinese government.

“The market a Chinese company chooses to list in today is influenced by factors in addition to its fundamental business value — it’s a product of geopolitical considerations,” said Linda Yu, a U.S.-based investor who previously worked with SoftBank, the Japanese technology giant, and Warburg Pincus to invest in China.

Four or five years ago, a successful Chinese company with a hold on a big market was a promising candidate to sell stock. “The question asked at the time was ‘Why haven’t you listed abroad yet?’” Ms. Yu said. “But now it has flipped to ‘Why would you?’”

Most of the Chinese companies currently listed on U.S. stock exchanges went public between 2018 and 2021, when investors scrambled for stakes in start-ups like Full Truck Alliance, whose apps connect freight customers and truck drivers, and Kanzhun, which runs a job-hunting platform.

The boom years ended midway through 2021 when the Chinese ride-hailing company Didi Chuxing went public on the New York Stock Exchange without a green light from Chinese regulators. At the time, Didi had more customers in China than Uber had in the rest of the world. Two days after it went public, authorities in China forced Didi to stop registering new users and to undergo a cybersecurity review over concerns that the listing could mean the company would have to transfer…