Beijing has taken a stake in the Chinese arm of Bytedance, the company behind viral video sharing app TikTok, in a further sign of the state’s tightening grip on technology companies. 

A fund backed by Chinese state groups took a 1pc stake in Bytedance’s Chinese business and has gained the right to take a board seat.

The acquisition is understood to only involve its Beijing-based arm and the government does not hold a stake in Bytedance’s international business, which is owned by a Cayman Islands-based holding company. 

TikTok, the video sharing app used by an estimated 1bn people, is owned by its international arm. Beijing’s investment in Bytedance was first reported by tech publication The Information. A Bytedance spokesperson declined to comment.

Beijing’s interest in the social media giant comes amid a crackdown in China on its homegrown technology companies.

Shares in listed Chinese technology companies fell on Tuesday as regulators announced new plans to tighten competition rules and data regulations.

The draft rules included bans on using customer data to influence them not to choose rival products and anti-competitive practices such as limiting traffic to rival platforms or allowing fake reviews. 

China has sought to censure its domestic technology companies, launching an investigation into ride hailing company Didi over its use of data after it went public in the US. It has also issued fines to e-commerce giant Alibaba and games publisher Tencent. 

Shares in Tencent fell 4pc on Tuesday, while shares in Hong Kong-listed shares in Alibaba fell 4.7pc.

Despite doubling its revenues last year to $34bn, Bytedance has been at the sharp end of Beijing’s crackdown. New rules against online tutoring services using foreign teachers have forced it to shed staff. 

Bytedance’s founder, Zhang Yiming, said he would step down from his role as chief executive earlier this year.

The fast-growing Chinese technology giant survived the threat of a ban from US President Donald Trump on TikTok that came close to forcing it to divest the popular app. Bytedance is said to be hoping to float in Hong Kong early next year. It was last valued at $180bn.