Trump Bans U.S. Transactions with Alipay and Seven Other Chinese Apps

On Tuesday, the U.S. President, Donald Trump signed an executive order banning transactions with eight software applications from China, consisting of Ant Group’s Alipay mobile payment app, according to the White House. This has resulted in increased tensions with Beijing two weeks before President-elect Joe Biden takes charge of the office.

The “Aggressive Action”

According to the White House, the move is focused on curbing the danger to Americans due to Chinese software applications, which have the possession of large user bases and access to sensitive and confidential data, a senior administration said in an interview.

The order counters that the United States must take “aggressive action” against developers of Chinese software applications to safeguard national security.

It employs the Commerce Department with defining which transactions are going to be curbed- under the directive within 45 days and aims at QQ Wallet from Tencent Holdings Ltd and WeChat Pay along with Alipay.

The order also has SHAREit, CamScanner, Tencent QQ, VMate which is published by Alibaba Group subsidiary UCWeb, and Beijing Kingsoft Office Software’s WPS Office.

Kingsoft explained in a statement published by Chinese state media that it did not anticipate Trump’s order to extensively impact the company’s business in the short term. Ant and the Biden transition team refused to comment on the matter.

Trump’s “Tough-on-China” Legacy

Alibaba, Tencent, CamScanner, SHAREit, and the Chinese Embassy in Washington have not released any comment on the matter.  

According to the executive order, “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.”

Such amount of data collection “would permit China to track the locations of federal employees and contractors, and build dossiers of personal information,” the document adds.

The order focuses on strengthening Trump’s tough-on-China legacy before the January 20 inauguration of Biden, a Democrat, who has expressed very little about his plans to tackle specific technological threats from China.

However, Biden could revoke the order on the first day of his presidency. His transition team did not immediately answer a request for comment on the matter.

Escalating Tensions

The order is projected to further escalate tensions between Washington and Beijing, which have been indulged in a harsh dispute over the origins of the coronavirus and a Chinese suppression of Hong Kong.

Apart from the 45-day timeline issued by the order, the Commerce Department is expected to act before January 20 to spot prohibited transactions, according to a U.S. official.

The directive is in synchronization with Trump executive orders issued in August ordering Commerce to ban a few of the U.S. transactions with WeChat and TikTok, the Chinese-owned video-sharing app.

If those orders have gone into effect, they would have effectively banned the utilization of Chinese apps in the United States and curbed Apple Inc and Alphabet Inc’s app stores from listing them in their respective menu for downloads.

The Trade Blacklist

However, the restrictions were scratched away by courts majorly on freedom of speech grounds. The White House is confident regarding the latest restrictions and these restrictions are going to stand up to judicial scrutiny, since it would be difficult for applications such as Alipay to bring a First Amendment case, according to a senior administration official.

U.S. 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 has been in Washington’s crosshairs for a long time. In November the U.S. State Department had provided a proposal to include Ant Group to a trade blacklist in order to avert U.S. investors from getting into its lucrative initial public offering. However, the Commerce Department, which monitors the blacklist, benched the proposal following Alibaba Group Holding Inc President Michael Evans asked Ross to reject the bid.

Ant is one the dominant mobile payments companies of China, providing loans, payments, insurance along with asset management services with the help of mobile applications. It is 33% owned by Alibaba and controlled by Alibaba founder Jack Ma; however, it is currently unavailable for American users.

Alipay was downloaded from Apple’s app store in U.S. and Google Play 207,000 times in 2020, while the image scanning app CamScanner was downloaded 4.4 million times and the office suite app WPS Office was installed 563,000 times, according to SensorTower which is a tech research firm. The executive order signed on Tuesday is the latest in a raft of stringent curbs on Chinese companies.

The White House disclosed an executive order in November banning U.S. investment in alleged Chinese military companies consisting of China’s top chipmaker SMIC and CNOOC the oil giant. Last month, the Commerce Department added dozens of Chinese companies, consisting of Chinese drone manufacturer SZ DJI Technology Co Ltd, to its trade blacklist.