Washington Gears Up for Adding China’s Ant Group to Blacklist

In a continuation of Washington’s trade attack on Beijing, the United States (U.S.) State Department has called for adding China-based mobile payment service company, Ant Group to the U.S. trade blacklist. According to two people familiar with the matter told Reuters, the State Dept. submitted a proposal to the Trump administration to take action against the fintech firm.

Hangzhou-based fintech company, majorly owned by Jack Ma’s Alibaba Group Holding Ltd. or Alibaba, has recently listed for initial public offering (IPO) in Shanghai and Hong Kong that could be worth about a record $35 billion. With the delaying of the approval of the Ant group’s IPO, anti-Chinese hardliners have urged the administration to mark the fintech company in the US blacklist before it goes public.

While it was yet uncertain when the concerned U.S. agency would review the matter since many agencies are currently occupied for the U.S. presidential election, which is about two weeks away. The latest move of the US government against the fintech firm also aimed to deter U.S. investors from participating in the IPO of the company.

Ant Group to Include in U.S. Blacklist

As a result of the deteriorating U.S.-China relationship over political and economic issues, Washington made its aggressive move and declared some Chinese tech giants including Huawei Technologies Co. Ltd. (Huawei) and ByteDance’s TikTok in its blacklist over the last few months. The Trump administration has been using the “entity list” as a tool to punish Chinese companies as they, once listed in the blacklist, would find it more difficult to access U.S. technologies and investors.

Although Ant group’s Alipay payment app is yet to arrive for American customers, the U.S. government suspects that the fintech firm could help the Chinese government by sharing sensitive banking data for American users. In 2018, the U.S. agency dealing with foreign investment blocked Ant group’s $1.2 billion bid to buy a Texas-based financial service provider, MoneyGram International Inc. (MoneyGram) over the national security issues.

Tencent’s WeChat platform, which was added to the trade blacklist by the Trump administration in August, and Alipay payment platform are payment service widely used among Chinese citizens who have accounts in renminbi in the U.S. As Reuters explained, “Most of its U.S. interactions are with merchants accepting payment from Chinese travelers and businesses in the country.”

Symbolic Move with No Real Impact

Analysts explained that the U.S. move against Ant Group was rather a symbolic and would have no real impact since many leaders in the Trump administration including Treasury Secretary Steve Mnuchin preferred to use a dovish stance on Beijing. Moreover, the move was unlikely to prevent U.S. investors from participating in the fintech firm’s IPO, as added by analysts.

Last week, Senator Marco Rubio called for the White House to consider delaying the IPO of the fintech company while the firm earlier stated that it had only 5% operations outside China. Meanwhile, the U.S. review committee has not yet released any statement about the latest proposal.

As Reuters reported, the Ant Group’s IPO listing in Hong Kong was sponsored by China International Capital Corp., with many American investment companies including Citigroup, JPMorgan, and Morgan Stanley. Swiss leading investment company, Credit Suisse was working as a joint global coordinator of the IPO.