Call it the latest salvo amid tensions between China and the United States that may heat up.
With the consumer in focus.
To that end, outgoing President Donald J. Trump signed an executive order that bans transactions with eight Chinese apps, among them Ant Group’s Alipay, Tencent’s QQ Wallet, Tencent QQ and WeChat Pay.
Among the other apps noted in the ban: CamScanner, SHAREit, VMate and WPS Office.
At a high level, the order focuses on data security. Trump stated that the Chinese apps can access users’ private data, which could conceivably be accessed by China’s government.
In terms of scale and reach — and as is germane to the payments space — Alibaba and Tencent, of course, have both. Alipay has more than 1 billion users, while WeChat Pay has about 900 million.
Delving into the language of the order, Trump stated that “additional steps must be taken to deal with the national emergency” that exists within the information and communications tech supply chain.
“Specifically, the pace and pervasiveness of the spread in the United States of certain connected mobile and desktop applications and other software developed or controlled by persons in the People’s Republic of China, to include Hong Kong and Macau (China), continue to threaten the national security, foreign policy, and economy of the United States,” the order contended.
The ability to collect data from those apps, according to the order, means that the Chinese government could conceivably gain access to data, “track the locations of Federal employees and contractors, and build dossiers of personal information,” adding that “the United States must take aggressive action against those who develop or control Chinese connected software applications to protect our national security.”
As a result, transactions tied to those apps, by any individuals, tied to any property under the jurisdiction of the U.S., are banned.
Looking Out 45 Days And Beyond
Starting in 45 days.
After, of course, Trump leaves office.
Whether the order will stand — or be struck down, or change — under the incoming Biden administration remains to be seen. The Commerce Department is charged with directly defining which transactions, specifically, might be banned.
But there is at least some indication that U.S. firms will push against the decree. Past, as they say, may be prologue.
As noted by The Wall Street Journal, a number of companies — including Apple, Walmart and others — objected to a previous order by Trump that limited WeChat apps (and TikTok apps, too). A preliminary injunction was issued by a federal judge last month against that order, which came over the summer.
This time around, the Journal reported, citing an unnamed former U.S. trade official, objections may come from U.S. firms as transactions may be limited in China. That could be, ostensibly, a retaliatory move that would make it harder for U.S. firms to make inroads in that country.
Trump’s actions against Alibaba and Tencent come as those firms have relatively muted presence here in the states. The Journal noted that Alipay was downloaded 207,000 times in the U.S. last year (via Apple’s App store and Google Play), per data from Sensor Tower; WeChat (and with it, the payment app) was downloaded 1.6 million times in 2020.
But the executive order may signal renewed focus on the consumer — and, specifically, cross-border transactions — as part of the battleground between the world’s two largest economies that has focused on topics touching tariffs and intellectual property, among other things.
If China bans U.S. activity across those same payment apps, that would, of course, hit Apple (where China is among the tech giant’s largest markets) and Starbucks (where, as we noted during the most recent earnings report, that mobile and digital ordering trends were improving).
Much depends on what the new administration will do, but the stage is set for increased attention to commerce, as a point of contention on a geopolitical stage.
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