US President Donald Trump on Tuesday signed an executive order banning the Alipay payment platform and seven other apps with links to the Chinese, saying apps can access their users’ private information.
Separately, U.S. officials are considering banning U.S. citizens from investing in Alibaba Group, a subsidiary of Alipay’s parent company, and Tencent Holdings, people familiar with the matter told Dow Jones. No decision has been made as agencies debate the possible effect on markets, the sources said.
Tuesday’s executive order bans transactions using CamScanner, QQ Wallet, SHAREit, Tencent QQ, VMate, WeChat Pay and WPS Office and Alipay, the payment platform owned by Chinese billionaire Jack Ma’s Ant Group Co.
The crackdown predates China’s launch of its central bank digital currency (CBDC), which is said to have influenced China’s crackdown on Ant Financial and other Jack Ma companies.
In October, at an event in Shanghai Ma criticized China’s financial system and its state-dominated banking sector, “We shouldn’t use the way of running a train station to regulate an airport,” Ma said, “ We cannot regulate the future. with the means of yesterday.
Since her comments, Ma has kept a low profile and her Ant Group IPO has been put on hold by regulators.
Industry watchers said the People’s Bank of China was using the digital yuan as part of a larger effort to curb the growth of Alipay and WeChat Pay.
The launch of a CBDC is also expected to slow Alipay’s micro-credit activity and provide financial services to the unbanked, while withdrawing deposits from commercial banks.
China has ramped up its efforts on the CBDC front and appears to be way ahead of the United States in developing a digital currency, analysts say.
By going after Ant now and banning Alipay, the United States could inadvertently help the Chinese government move forward with its digital currency revolution, as people have no choice but to embrace its system of payment. The rationale for the order is also curious, given that all kinds of apps in the US and elsewhere, whether financial or otherwise, have the power to access people’s private information.
The executive order goes into effect in 45 days and states that the apps are banned because they pose a threat to US national security.