Taking names, making lists — and boosting geopolitical tensions.
While Big Tech bears the brunt of it all.
To that end, The Wall Street Journal reported Monday (Sept. 21) that leadership within China has “sped up development” of a list of U.S. firms that could conceivably be targeted for punishment amid the escalating spat that has focused on technology, data privacy and security.
Yet some individuals within China’s leadership ranks are hesitant to finalize the list, or to act upon it, until after the U.S. election in November.
The blacklist itself is nothing new, with a May 2019 announcement having come from China that would have generated such a roster of companies and individuals. But back then, the U.S. and China delved into trade negotiations that ultimately led to a partial trade agreement.
Now, Chinese agencies spanning the Commerce Ministry, the Cybersecurity Administration and other regulators have been asked to submit names for the Chinese blacklist, the Journal reported, citing unnamed people “familiar with them matter.”
So much hinges, now, on what happens — or won’t happen — with TikTok and WeChat. As has been widely reported, Oracle is gunning to grab a 12.5 percent stake in TikTok, Walmart for a 7.5 percent stake in TikTok Global. For now the bans that loomed for TikTok and WeChat may have been sidestepped.
The cross-border dance that is going on in Washington, D.C. and Beijing is one that looks at supply chain relationships. And one firm that has reportedly made the list for all the Chinese regulators has been Cisco, which has been losing at least some contracts with Chinese telecom players.
The Chinese list, as we noted is not public. But we would contend that there exists some low-hanging fruit that would be at the proverbial top of that list. Apple comes in near the top, of course. China accounted for roughly $9 billion in sales for the latest quarter (about 15 percent of the tally). The continued push by payments network giants such as Mastercard may see a chilling effect.
As reported earlier this month, China’s central bank gave Mastercard permission to set up a bank card clearing business, granting access to a $27 trillion payments market (right when retail spending in the nation is just beginning to rebound from a long slump amid the pandemic).
The central bank said Mastercard and its partner, NetsUnion Clearing Corp., have to complete all preparation work within 12 months (which would take us into early 2021). And as PYMNTS reported earlier in the year, as part of China’s trade deal with the U.S. (that phase one pact), Chinese regulators said applications from providers of electronic-payments services would be considered within 90 days. Visa’s own efforts in China have also focused on the process of getting a bank card clearing license.
There have been reports that, per the Commerce Ministry, the unreliable entity list will not target a specific country or entity, as CNBC said. But tariffs levied, across several players within a certain vertical, or contracts that are cancelled, can have the same net (negative) effect.