Trump order to ban Alipay is latest headache for Biden, China

President Trump has issued an executive order banning transactions with eight more Chinese apps including Alipay, WeChat Pay and Tencent QQ; it claims that the data they collect makes them a security risk to American citizens

by Jon Macaskill and Umesh Desai
Trump order to ban Alipay is latest headache for Biden, China
Trump wants to leave Biden with a host of anti-China executive orders and a dilemma over enforcement. Image: Reuters 

(ATF) US President Donald Trump has signed an executive order which aims to ban transactions on eight Chinese software applications, including Ant Group’s Alipay, citing national security concerns.

The move seeks to increase pressure on China before the Biden administration takes office, but it may hamper incoming President Joe Biden’s attempts to resume cooperation with Beijing.

The order – effective in 45 days – prohibits transactions with Alipay, CamScanner, QQ Wallet, SHAREit, Tencent QQ, VMate, WeChat Pay, and WPS Office after similar bans sought to block the use of WeChat and TikTok.

In a statement issued by the White House, Trump said: “The pace and pervasiveness of the spread in the United States of certain connected mobile and desktop applications and other software developed or controlled by persons in the People’s Republic of China, to include Hong Kong and Macau, continue to threaten the national security, foreign policy, and economy of the United States. 

"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.”

The executive order comes amid a broader Trump administration campaign for a “clean network,” which aims to purge Chinese companies from US internet and telecommunications infrastructure.

The Commerce Department has been told to implement the order and define which transactions will be banned under the directive.

Commerce Secretary Wilbur Ross has pledged to do this. However, the 45 days in which it must act ends after Trump leaves office in two weeks time, on January 20.

Ross may fast-track order

Outgoing Commerce Secretary Wilbur Ross may look to fast-track Trump’s order to ban Alipay and other Chinese apps in order to put pressure on his successor to maintain a tough stance on China. In fact, one US official has told Reuters that is what is planned.

So, the issue is likely to end in Biden's lap and probably the courts as well, as happened with Trump's earlier bid to ban transactions on WeChat and TikTok.

But the President-elect has yet to name his nominee to be Commerce Secretary.

Rhode Island governor Gina Raimondo has been discussed as the next potential Commerce Secretary, though no announcement has been made.

Like many potential Biden appointees, Raimondo is viewed as a centrist politician. She has experience working in venture capital and was a backer of former New York City mayor Michael Bloomberg as a presidential nominee before Biden won the Democratic nomination last year.

The order argues that the United States must take "aggressive action" against developers of Chinese software applications to protect national security.

It says such data collection "would permit China to track the locations of federal employees and contractors, and build dossiers of personal information."

A US Tencent spokeswoman and the Chinese Embassy in Washington, contacted by Reuters did not immediately comment.

The order aims to cement Trump's tough-on-China legacy before the January 20 inauguration of Biden, a Democrat, who has said little about how he plans to address specific tech threats from China.

Biden could simply revoke the order on the first day of his presidency, but his team overseeing the transition had not immediately responded to a Reuters request for comment on the matter.

The order will likely ratchet up tensions further between Washington and Beijing, which have been locked in a bitter dispute over the origins of the coronavirus and a Chinese crackdown on Hong Kong.

WeChat, TikTok orders blocked by courts

The directive on Tuesday January 5 mirrors Trump executive orders signed in August that directed Commerce officials to block some US transactions with WeChat and the Chinese-owned video app TikTok.

Had those orders gone into effect, they would have effectively banned the Chinese apps' use in the United States and barred Apple and Alphabet (Google) app stores from offering them for download for new users.

The restrictions, however, were blocked by courts mainly on freedom of speech grounds. The White House is confident the new restrictions will stand up to judicial scrutiny, since applications like Alipay would struggle to bring a First Amendment case, the senior administration official told Reuters.

US Secretary of Commerce Wilbur Ross said in a statement that he supports Trump's "commitment to protecting the privacy and security of Americans from threats posed by the Chinese Communist Party."

Alipay, Ant Group's payment app, has been in Washington's crosshairs for months.

In November the US State Department submitted a proposal to add Ant Group to a trade blacklist in order to deter US investors from taking part in its lucrative initial public offering. But the Commerce Department, which oversees the blacklist, shelved the proposal after Alibaba Group Holding President Michael Evans urged Ross to reject the bid.

Ant is China's dominant mobile payments company, offering loans, payments, insurance and asset management services via mobile apps. The group, formerly known as Alipay, reportedly has more than 730 million users. It is 33% owned by Alibaba and controlled by founder Jack Ma, but is currently unavailable for American users.

Tuesday's move is the latest in a raft of tough new curbs on Chinese companies.

The New York Stock Exchange is reconsidering its plan to allow three Chinese telecom giants to remain listed, after a series of flip-flops following Trump’s executive order barring investment in firms Washington says are tied to the Chinese military.

Early on Tuesday, the exchange reversed its decision to delist after consulting with regulatory authorities in connection with the US Treasury's Office of Foreign Assets Control which drew criticism from US politicians.

The White House also unveiled an executive order in November banning US investment in alleged Chinese military companies including China's top chipmaker SMIC and oil giant CNOOC.

And last month, the Commerce Department added dozens of Chinese companies, including Chinese drone manufacturer SZ DJI Technology Co Ltd, to a trade blacklist.

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