Tech Tension

Tech titans Alibaba and Tencent facing US investment ban

China’s ‘big two’ are in the crosshairs of Washington as the US expands its blacklist

Tech giants Alibaba and Tencent face being placed on a United States blacklist in the final days of President Donald Trump’s administration.

The “big two” are household names in China and are worth a combined US$1.3 trillion. But the White House could now move to turn the taps off on a flood of US investment into the high-profile listed companies, the Reuters news agency reported.

At least 35 Chinese firms have been placed on Washington’s blacklist because of alleged links to Beijing’s government. 

Still, the US Defense Department has declined to comment on speculation that e-commerce group Alibaba and entertainment behemoth Tencent will join them.

“Officials, who oversee the blacklist designations, have not yet finalized plans, the sources said, speaking on condition of anonymity because the deliberations are private,” The Wall Street Journal revealed.

The Facts:

  • Alibaba and Tencent dominate the online landscape in China.
  • Both companies are now facing antitrust investigations in their home market as Beijing gets tough on big tech.
  • The Chinese regulators pulled the plug on a $37 billion initial public offering of Ant Group, an Alibaba affiliate, in November.
  • On Tuesday, Washington banned financial transactions on fintech apps Alipay, part of Ant, QQ Wallet, an affiliate of Tencent, and WeChat Pay.
  • Washington has so far blacklisted dozens of Chinese companies, including leading chipmaker SMIC and oil juggernaut CNOOC, as well as 5G telecom groups Huawei and ZTE.
  • News broke earlier this week that the Chinese telecom trio of China Mobile, China Telecom and China Unicom could be delisted on the New York Stock Exchange, wiping off $5.6 billion of their value.

What was said: There has been a deafening silence about the potential move against Alibaba and Tencent. But the decision to target Alipay, QQ Wallet and WeChat Pay was backed up by a White House executive order. “Chinese connected software applications can access and capture vast swathes of information from users, including sensitive personally identifiable information and private information,” it stated.

Reaction to the news: “Once again the United States has been pinning political and ideological labels on economic and trade issues and exploiting its state power to crack down on foreign companies. The US has turned its back on international trade rules [and] fair competition. China will take necessary measures to safeguard the legitimate and lawful rights of Chinese companies,” Foreign Ministry spokesperson Hua Chunying told a daily media briefing on January 7.

China Factor comment: Just days before Joe Biden enters the White House, President Trump has ratchet up the pressure on Beijing. During the past two years, Washington has been a vocal critic of China’s appalling human rights record. It has also condemned the crackdown in Hong Kong and China’s militarization of the South and East China Seas. Biden is likely to take a similar hardline on these issues.

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