Donald Trump bans WeChat, TikTok, stoking tension with Beijing

He calls these apps 'significant threats'; executive order will come into effect in 45 days

US President Donald Trump on Thursday unveiled sweeping bans on US transactions with China’s ByteDance, owner of video-sharing app TikTok, and Tencent, operator of messenger app WeChat, in a major escalation of tensions with Beijing.

The executive orders, which go into effect in 45 days, come after the Trump administration said this week it was stepping up efforts to purge “untrusted” Chinese apps from US digital networks and called TikTok and WeChat “significant threats.” The hugely popular Tiktok has come under fire from US lawmakers and the administration over national security concerns surrounding data collection, amid growing distrust between Washington and Beijing.

On Wednesday, US Secretary of State Mike Pompeo expanded efforts on a program dubbed “Clean Network” to prevent various Chin­ese apps as well as Chinese telecoms firms from accessing sensitive information on US citizens and businesses. James Lewis, a technology expert with Washington-based think tank Center for Strategic and International Studies, said the orders appeared coordinated with Pompeo’s announcement.

“This is the rupture in the digital world between the US and China,” he said. “Absolutely, China will reta­liate.” “On TikTok, Trump is clearly putting pressure on Bytedance to close the deal,” Lewis said.

TikTok has 100 million users in the United States. While WeChat is not popular in the country, the app, which has over 1 billion users, is ubiquitous in China. It is also widely used by expat Chinese as a main platform for communications with family and friends as well as a medium for various other services such as games and e-commerce.

WeChat and TikTok were among 59 mostly Chinese apps outlawed in India in June for threatening the country’s “sovereignty and integrity.”

Operator Tencent is China’s second most-valuable company after Alibaba at $686 billion. It is also China’s biggest video game company and earlier this summer opened California-based studio.

Its shares fell nearly 10 per cent in Hong Kong after Trump’s order. The yuan, which is sensitive to Sino-US relations, lost 0.4 per cent.

Tencent and ByteDance declined to comment.

Prez’s advisers want earring China firms to be delisted
 

Trump administration officials have urged the president to delist Chinese companies that trade on US exchanges and fail to meet US auditing requirements by January 2022, Securities and Exchange Commission (SEC) and Treasury officials said on Thursday.

The remarks came after President Trump tasked a group of key advisers, including Treasury Secretary Steve Mnuchin and SEC Chairman Jay Clayton, with drafting a report with recommendations to protect US investors from Chinese companies whose audit documents have long been kept from US regulators.

It also comes amid growing pressure from Congress to crack down on Chinese companies that avail themselves of US capital markets but do not comply with US rules faced by American rivals.

“We are simply leveling the playing field,” a Treasury official told reporters in a briefing call about the report. The US Senate unanimously passed legislation in May that could prevent some Chinese companies from listing their shares on US exchanges unless they follow standards for US audits and regulations.

Democratic Senator Chris Van Hollen, who sponsored the bill described the recommendations as “an important first step,” but said that “without the added teeth of our bill, this report alone does not implement the requirements necessary to protect everyday American investors.

The administration’s recommendations, if implemented via an SEC rulemaking process, would give Chinese companies already listed in the United States until Jan. 1, 2022, to ensure the US auditing watchdog, known as the PCAOB, has access to their audit documents.

They can also provide a “co-audit,” for example, performed by a US parent company of the China-based affiliate tasked with auditing the Chinese firm. However, companies seeking to list in the United States for the first time will need to comply immediately, the officials said.

A State Department official told Reuters the administration plans soon to scrap a 2013 agreement between US and Chinese auditing authorities to set up a process for the PCAOB to seek documents in enforcement cases against Chinese auditors.

China said on Friday that the two countries have “good cooperation” in monitoring publicly listed firms.

“The current situation is that some US monitoring authorities are failing to comply with their obligations, and what they are doing is political manipulation - they are trying to force Chinese companies to delist from US markets,” foreign ministry spokesman Wang Wenbin told a media briefing.

China softened its tone in a subsequent statement, calling for a resolution through dialogue.

The PCAOB has long complained of China’s failure to grant requests, giving it scant insight on audits of Chinese firms that trade on US exchanges.

The report also recommends requiring greater disclosure by issuers and registered funds of the risk of investing in China, as well as mandating more due diligence by funds that track indexes and issuing guidance to investment advisers about fiduciary obligations surrounding investments in China.

The moves come amid rising tensions between Washington and Beijing over China’s handling of the coronavirus and its moves to curb freedoms in Hong Kong, among other issues.