You are here: Home » International » News » Companies
Business Standard

Trump admin to consider adding China's Ant Group to trade blacklist: Report

It was not immediately clear when the U.S. government agencies that decide whether to add a company to the so-called Entity List would review the matter

Topics
US China | Donald Trump administration | Donald Trump

Reuters  |  WASHINGTON 

Photo: Reuters
Photo: Reuters

By Humeyra Pamuk, Alexandra Alper, Karen Freifeld and David Shepardson

WASHINGTON (Reuters) - The U.S. State Department has submitted a proposal for the Trump administration to add China's Ant Group to a trade blacklist, according to two people familiar with the matter, before the financial technology firm is slated to go public.

It was not immediately clear when the U.S. government agencies that decide whether to add a company to the so-called Entity List would review the matter.

The move comes as China hardliners in the Trump administration are seeking to send a message to deter U.S. investors from taking part in the initial public offering for Ant. The dual listing in Shanghai and Hong Kong could be worth up to a record $35 billion (27 billion pounds).

The latest swipe at China also comes in the run-up to the Nov. 3 election, in which U.S. President Donald Trump, trailing in the polls against his Democratic rival Joe Biden, has made a tough approach to China an important foreign policy platform.

While the Alipay payment app is currently unavailable for American users in the United States, according to a spokesperson for Ant, Trump administration officials fear the Chinese government could access sensitive banking data belonging to future U.S. users.

A powerful security panel known as the Committee on Foreign Investment in the United States (CFIUS) stopped its $1.2 billion bid to buy the money transfer company Moneygram in 2018 over national security risks.

The State Department did not respond to a request for comment. Ant, an affiliate of Alibaba Group Holding Ltd, declined to comment but in a recent statement to Reuters emphasized that only 5% of the company's business is outside China.

The entity list, which makes it more difficult for U.S. firms to sell high-tech items to blacklisted companies, has become the tool of choice for the Trump administration to punish Chinese companies, though its real-world impact is sometimes questionable.

While curbing access to U.S. technology deals a blow to like Chinese telecoms giant Huawei Technologies, which was added in May 2019, its impact on a fintech giant like Ant is likely to be more symbolic and does not prevent U.S. investors from taking stakes in the firm.

The administration has been largely loathe to use tougher tools against China, such as freezing assets in the United States, which many attribute to Treasury Secretary Steve Mnuchin's dovish stance on Beijing.

Ant is China's dominant mobile payments company, offering loans, payments, insurance and asset management services via mobile apps. Ant is 33% owned by Alibaba and controlled by Alibaba founder Jack Ma.

Ant's Alipay payment platform, like Tencent's WeChat platform, is used primarily by Chinese citizens with accounts in renminbi. Most of its U.S. interactions are with merchants accepting payment from Chinese travelers and businesses in the country.

Senator Marco Rubio, who has successfully urged the Trump administration to pursue investigations of Chinese companies, called last week for the U.S. government to consider options to delay Ant's IPO.

The impact of such blacklisting on firms seeking an IPO is evidenced by the failure of Chinese artificial intelligence firm Megvii Technology to clear a hearing with the Hong Kong exchange last November, en route to a planned listing of $500 million.

The exchange sought more information from Megvii, including details of its suitability for a Hong Kong IPO, after the United States put it on a trade blacklist in October.

The U.S. End User Review Committee, which decides which to add to the list, includes the departments of State, Defense, Energy and Commerce. Defense and Commerce declined to comment while Energy did not respond to a request for comment.

The Hong Kong leg of the IPO is being sponsored by China Capital Corp, Citigroup, JPMorgan and Morgan Stanley. Credit Suisse is working as a joint global coordinator. Goldman Sachs is also involved.

However, approval for the IPO has been delayed. On Tuesday, Reuters reported China's securities regulator is probing a potential conflict of interest in Ant's planned stock listing.

 

(Reporting by Humeyra Pamuk, Alexandra Alper, Karen Freifeld; Additional Reporting by David Shepardson, Mike Stone and Julie Zhu; Writing by Alexandra Alper; Editing by Chris Sanders, Lisa Shumaker and Edwina Gibbs)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

Dear Reader,


Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Thu, October 15 2020. 12:19 IST
RECOMMENDED FOR YOU
.