The U.S. State Department is backing the Trump administration's plan to add China financial technology company Ant Group to its trade blacklist.
According to sources familiar with the matter, the agency has submitted a proposal to the White House to bar the China company from the country ahead of its public listing.
Apart from reducing China's dominance in the country's financial technology sector, the plan is also meant to discourage investors from participating in the company's planned initial public offering. Ant Group is set to list its shares simultaneously in Hong Kong and Shanghai later in the year in a deal estimated to be worth $35 billion.
Ant Group, an affiliate of China e-commerce company Alibaba Group, has said less than 5% of its business is conducted overseas and most Americans don't have access to its finance services. Ant Group's Alipay digital payment service is only used in the U.S. by merchants that accept payments from China travelers.
While it is not yet clear if other agencies or the White House have reviewed the State Department's proposal, experts said President Donald Trump may use it to underscore his tough approach to China to win votes in the election Nov. 3. The decision to add the company to the Entity List will lie solely with the country's End-User Review Committee. The committee is composed of the country's departments of State, Energy and Defense.
Trump has already said he intended to place more China companies on the list. Trump and some officials claim allowing China companies to operate in the U.S. might give them access to sensitive data which will, in turn, threaten national security.
As tensions between China and the U.S. continue the U.S. government has been using its Entity List as a tool against China. The inclusion of companies like Huawei Technologies and ZTE has had real-world effects on their respective businesses - angering China.