Chinese govt nixes Facebook’s plans to open innovation hub: report

facebook chinese govt
REUTERS/Eric Gaillard

(Reuters) – The Chinese government has withdrawn its approval for Facebook’s plan to open a venture in the eastern province of Zhejiang, the New York Times reported on Wednesday, citing a person familiar with the matter.

Facebook said on Tuesday it planned to create an “innovation hub” to support local start-ups.

The subsidiary was registered in Hangzhou, according to a filing approved on China’s National Enterprise Credit Information Publicity System last week and seen by Reuters on Tuesday.

A Chinese government database showed that Facebook had gained approval to open a subsidiary. The registration has since disappeared, according to checks made by Reuters.

Facebook could not be immediately reached for comment.

Shares of Facebook reversed course to trade marginally down at $214.40 after touching a record high earlier in the session.

The decision to take down the approval came after a disagreement between officials in Zhejiang and the national internet regulator, the Cyberspace Administration of China, which was angry that it had not been consulted more closely, according to the New York Times.

The Chinese internet regulator was not immediately available for comment.

While the about-face does not definitively end Facebook’s chances of establishing the company, it makes success very unlikely, a source told the New York Times.

Facebook is the latest company to get caught in the crosshairs of rising US-China trade tensions. US chipmaker Qualcomm’s proposed bid to buy NXP Semiconductors NV has also got stuck awaiting approval from Chinese regulators.

Facebook’s website remains banned in China, which strictly censors foreign news outlets, search engines and social media including content from Twitter and Google.

Facebook’s messaging app WhatsApp is also blocked in the country.

(Reporting by Supantha Mukherjee in Bengaluru; Editing by Bernard Orr)

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