The US State Department has submitted a proposal for President Donald Trump's administration to add China's Ant Group to a trade blacklist, according to two people familiar with the matter, before the fintech arm of e-commerce giant Alibaba is slated to go public in Hong Kong and Shanghai.
It was not immediately clear when the US government agencies that decide whether to add a company to the so-called entity list would review the matter.
But the move comes as China hardliners in the Trump administration are seeking to send a message to deter US investors from taking part in the initial public offering, worth up to a record US$35 billion.
They fear buying shares in the company could expose them to fraud or that Ant could give the Beijing government access to sensitive banking data belonging to US citizens.
The State Department did not immediately respond to a request for comment.
The entity list, which makes it more difficult for US firms to sell high-tech items to blacklisted companies, has become the tool of choice for the Trump administration to punish Chinese companies, though its real-world impact is sometimes questionable.
While curbing access to US technology deals a blow to companies like telecoms giant Huawei Technologies, which was added in May 2019, its impact on a fintech giant like Ant Group is likely to be more symbolic.
Earlier this week, reports said the China Securities Regulatory Commission was looking into the role of Alipay, Ant's flagship payment platform, as the only third-party channel through which retail investors could buy into five mainland mutual funds investing in the IPO.
The conflict-of-interest investigation was not expected to derail the IPO but could delay it, sources said. The company was still awaiting approval in Hong Kong for a listing this month, a process that required the CSRC's approval, the sources added. (Reuters)