Commentary on Political Economy

Tuesday, 5 January 2021


Trump moves to ban Chinese software apps including Alipay

Donald Trump at a rally on Monday night with Kelly Loeffler, the Georgia senator whose husband, Jeffrey Sprecher, is the chairman of the New York Stock Exchange © AP

US president Donald Trump raised tensions with China on Tuesday, moving to ban transactions with Chinese software applications including Alipay, WeChat Pay and Tencent's QQ Wallet.

The action taken by Mr Trump in an executive order is the latest in a series of moves by his administration to crack down on Beijing before Joe Biden takes over as president on January 20.

Mr Trump said in a message to Congress explaining the order that the “pace and pervasiveness” of the spread of Chinese software apps “continue to threaten the national security, foreign policy and economy” of the US.

“By accessing personal electronic devices such as smartphones, tablets, and computers, Chinese connected software applications can access and capture vast swaths of information from users, including sensitive personally identifiable information and private information,” he said.

The US president said the ban would apply to Alipay, CamScanner, QQ Wallet, SHAREit, Tencent QQ, VMate, WeChat Pay, and WPS Office, and would be administered by the commerce secretary.

WeChat has already been targeted in a previous executive order against Chinese social media apps, which has yet to take effect because of court challenges. In August Mr Trump issued sanctions on We Chat and TikTok, but a California judge subsequently blocked the WeChat order while judges in Washington DC and Pennsylvania halted the TikTok ban.

Mr Trump said the commerce secretary should evaluate Chinese software apps that “may pose an unacceptable risk” to the US, and work with and intelligence officials on “recommendations to prevent the sale or transfer of United States user data to, or access of such data by, foreign adversaries”.

Alipay — Ant Financial’s payments app — has deals with merchants in the US such as Walgreens and claims to work with more than 250 overseas partners primarily to support cross-border payments for Chinese tourists travelling overseas. However, the bulk of its roughly 1bn users are in China. Hong Kong-listed shares in Alibaba and Tencent were up between 2 and 3 per cent in Wednesday morning trading.

The crackdown on Chinese software apps came as the Trump administration moved to enforce a ban on US investment in Chinese companies with military ties, which was announced last year.

In response to the order, the New York Stock Exchange initially said it would delist China Mobile, China Telecom and China Unicom from the exchange, but abruptly reversed course this week, sowing confusion in Washington and on Wall Street.

It also prompted an intervention by Steven Mnuchin, the US Treasury secretary, who complained about the reversal in a call to Stacey Cunningham, the NYSE president, on Tuesday.

Confusion had been sown by a Treasury update on December 28 that indicated that subsidiaries of the Chinese groups named in an earlier executive order would be affected by the mandate once the department published a list of those affected subsidiaries. The Treasury has not yet published that list, resulting in varied responses from index providers and exchanges seeking to comply with the order.

In response to the reversal, some China hawks in Washington bristled, putting pressure on Mr Mnuchin to address the issue. “If it is true that someone at @USTreasury advised @NYSE to reverse the decision to delist these Chinese companies it was an outrageous effort to undermine @POTUS Executive Order,” Marco Rubio, the Florida Republican senator, wrote in a tweet on Tuesday. “The days of Wall Street & #China benefiting at the expense of American workers & industry has to end.”

The confusion over the delistings of the Chinese telecommunications groups also came amid heightened focus on the ties between the Trump administration and the NYSE. On Monday night, Mr Trump praised Jeffrey Sprecher, the chairman of the NYSE and husband of Kelly Loeffler, the Republican senator, at a campaign rally for her re-election in Georgia.

“Kelly’s husband is one of the great entrepreneurs in our country. He’s respected by everybody. He’s a tough guy, but he is a sweetheart, and he loves your state,” Mr Trump said.

The NYSE declined to comment.

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