Donald Trump has turned his sights on a third major Chinese technology company, giving US companies 45 days to stop dealing with WeChat, the messaging app owned by Tencent.
The Hong Kong-listed shares of Tencent, China’s second most valuable tech company with a market capitalisation of close to $700bn, fell as much as 10.1 per cent after the US president issued an executive order banning “any transaction that is related to WeChat” after the grace period. Shares later recovered to close down just over 5 per cent.
Tencent said it was “reviewing the executive order to get a full understanding”. In a worst case scenario, the order raises the possibility of WeChat being banned from the Apple and Google app stores.
WeChat has more than 1bn user accounts in China and is an essential app for messaging, payments and other functions. But in the US, it is mainly used by the Chinese diaspora and has been downloaded only 19m times since 2014, according to Sensor Tower data.
Mr Trump, who has been campaigning against Chinese apps that he describes as a threat to the US’ economic and national security, issued a similar order that set the same time limit on dealing with TikTok, the short video app owned by the private Chinese tech company ByteDance.
Microsoft is negotiating to buy TikTok ahead of a September 15 deadline previously set by Mr Trump. One US official said the 45-day window would “give Microsoft and other interested purchasers time to reach a deal with TikTok’s owners that adequately addresses the national security concerns posed by the app”.
TikTok said it was “shocked” by the executive order, which was “issued without any due process” and risked undermining the trust of businesses in the US rule of law.
The clampdown on the apps is just one action in an increasingly broad US campaign against China over everything from its trade practices and alleged human rights abuses in Xinjiang to its recent imposition of a security law in Hong Kong to crack down on pro-democracy protesters.
Most China experts in the US expect that Mr Trump will continue to increase pressure on China as he campaigns for re-election in November.
In a relatively measured response, China’s Ministry of Foreign Affairs said Washington was using “state power” against non-American businesses, even at the expense of US citizens. “The US . . . puts selfish interests above market principles and international rules,” it said.
Earlier on Thursday, the Trump administration issued recommendations that Chinese companies listed on US stock exchanges be delisted unless they provided US regulators with access to their audited accounts.
The moves came one day after Mike Pompeo, US secretary of state, signalled a broader campaign against Chinese tech companies with access to the data of US citizens.
“This is an effort to put pressure on TikTok and a larger plan to rupture connectivity between the US and China,” said Jim Lewis, a cyber security expert at the Center for Strategic and International Studies in Washington.
Mr Lewis said the WeChat order would have less material impact because it only affected transactions with Tencent related to the messaging app and had no impact on the company’s gaming business. He said WeChat had only about 3m users in the US with the vast majority being Chinese.
In his order, Mr Trump said the apps captured huge amounts of data about users, creating a risk that Beijing could access the personal information of US citizens and conduct various kinds of spying. He said WeChat also allowed China to monitor its citizens when visiting the US.
Mr Trump said Chinese data collection would let Beijing “build dossiers of personal information for blackmail, and conduct corporate espionage”.
Mr Trump invoked the 1977 International Emergency Economic Powers Act to justify the bans on US companies dealing with ByteDance and with Tencent in connection with WeChat. The law provides a broad mechanism for the US government to impose restrictions related to companies deemed to pose a threat.
In its campaign against Chinese technology companies, the White House is focusing on mobile apps, following a largely successful effort to convince US allies to purge Huawei, the Chinese telecoms equipment provider, from their 5G networks.
Mr Trump has dramatically shifted his posture on China in recent months, as he tried to blame Beijing for the global spread of coronavirus. He had taken a softer line on China last year to avoid derailing talks aimed at ending the trade war. But after concluding a first phase deal and following the outbreak of Covid-19 he has adopted a harsher stance.
Tencent, the Shenzhen-based technology company, opened a US office in 2013 with the aim of expanding WeChat’s popularity in the US. The app is used by the Chinese diaspora and businesspeople to deal with their counterparts in mainland China, where the app is a must-have utility.
WeChat heavily censors messages passed between accounts registered to Chinese mobile numbers, wherever they are in the world. According to University of Toronto’s Citizen Lab, it also monitors overseas-registered users’ messages to improve its censorship methods in China.
Alibaba, another Chinese internet company, fell 6.4 per cent. China’s CSI 300 index dropped 1.7 per cent and Hong Kong’s Hang Seng index fell 2.6 per cent on the news. China’s offshore-traded renminbi fell 0.4 per cent to 6.9680 per dollar.
Additional reporting by Kiran Stacey in Washington and Hudson Lockett in Hong Kong
Follow Demetri Sevastopulo on Twitter: @dimi
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