China-US tech war: Trump’s ban on Alipay and WeChat Pay another problem for Biden to deal with


Biden will be sworn into office in two weeks and it is not clear whether he plans to implement Trump’s new order, which is meant to take effect in 45 days. Alipay has more than one billion users and 80 million merchants in China but the app was only downloaded 207,000 times in the US last year. — SCMP

US President Donald Trump’s new executive order banning transactions with eight Chinese apps, including Alipay and WeChat Pay, marks the latest escalation of the US-China tech war and will be a problem the incoming Biden administration will need to manage, analysts said.

President-elect Joe Biden will be sworn into office in two weeks and it is not clear whether he plans to implement this order, which is meant to take effect in 45 days.

However, the direct financial impact on the targeted apps and their operators is likely to be limited due to uncertainties over the order’s implementation and the limited exposure of the apps to the US market, analysts said.

The latest executive order from the White House cited national security concerns, saying the Chinese programs could provide the personal data of American citizens to the Chinese government. If the order goes into effect, the US Commerce Department will be responsible for deciding which transactions are prohibited.

The order covers Ant Group’s Alipay as well as Tencent Holdings’ financial arm WeChat Pay and its QQ Wallet and messaging app QQ. Other apps on the blacklist include scanning app CamScanner, cross platform sharing tool SHAREit, video sharing app VMate, and Beijing Kingsoft Office Software’s WPS Office.

Wang Yong, a professor at the Peking University School of International Studies, said Trump’s latest move was an “attempt to set obstacles in Biden’s policy towards China” just before his administration leaves office.

“[President Trump] dug a lot of holes. The Biden administration will need to pay a higher price, especially in political capital, [if they want to] improve the Sino-US relationship,” Wang said.

The ban comes five months after a similar move against TikTok and WeChat, although that executive action has since stalled amid a series of legal challenges. Beijing-based ByteDance, the owner of TikTok, failed to meet a US-imposed deadline of December 4 for it to divest its short video platform as its subsequent deal with Oracle to take partial ownership is still being scrutinised by both sides. Meanwhile, TikTok has yet to be hit with any further action from Washington.

Several US courts have temporarily blocked the implementation of TikTok’s US ban after the legality of the executive order was challenged by ByteDance. In a ruling in September, District Court Judge Carl J. Nichols blocked the phase one ban, saying the US president had overstepped his authority in invoking a national emergency as the reason for the action.

With the latest action, Ant Group – which halted dual initial public offerings in Shanghai and Hong Kong in November after Chinese regulators stepped in – now finds a shadow cast over its overseas business despite having a limited presence in the US.

Ant revealed in its prospectus that Alipay had more than one billion users and 80 million merchants in China, but cited figures from research firm Sensor Tower showing that the app was only downloaded 207,000 times in the US last year from Apple’s App Store and Google Play.

Ant is affiliated with Alibaba, owner of the South China Morning Post.

Ant declined to comment. Tencent did not immediately respond to a request for comment.

Chinese Foreign Ministry spokeswoman Hua Chunying said on Wednesday that the executive order was another example of the US abusing its national power and “unreasonably suppressing foreign companies”.

Sensor Tower data showed Tencent’s QQ was downloaded 296,000 times from US app stores in 2020 compared with 40.7 million in China in the same year. Camscanner, the image scanner, was the most popular of the banned apps with 4.4 million US downloads last year.

“China is still the priority market for most of these apps, including Alipay and WeChat Pay,” said Nick Marro, global trade lead at The Economist Intelligence Unit. “These moves might frustrate international expansion plans, but they won’t dent the main revenue sources or user bases for these companies.”

Jim Fitzsimmons, head of the cybersecurity practice in Asia-Pacific for risk consultancy Control Risks, said the impact of the executive order on US companies working with the Chinese businesses “would be minimal because there’s very few people who really use those applications inside the US”.

At the same time, it remains unclear how Biden will respond to Trump’s executive orders.

“All executive orders signed by one president can be easily reversed by a later president with a new executive order. So Biden can just revoke it with a new executive order he can write within a few hours and then sign it,” said Dov Levin, a professor at the University of Hong Kong.

“Likewise, given the [vague] way this executive order is written, Biden’s new secretary of commerce could define the ban to be effectively meaningless,” he said.

In any case, Biden may not be in a rush to reverse Trump’s executive orders targeting China because his top priority will be controlling the coronavirus pandemic, some analysts said. – South China Morning Post

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