THE U.S. State Department has submitted a proposal for the Trump administration to add China’s Ant Group to a trade blacklist, according to two people familiar with the matter, before the financial technology firm is slated to go public.

It was not immediately clear when the U.S. government agencies that decide whether to add a company to the so-called entity list would review the matter.

The move comes as China hardliners in the Trump administration are seeking to send a message to deter U.S. investors from taking part in the initial public offering (IPO) for Ant. The dual listing in Shanghai and Hong Kong could be worth up to a record US$35 billion.

The latest swipe at China also comes in the run-up to the Nov. 3 election, in which U.S. President Donald Trump, trailing in the polls against his Democratic rival Joe Biden, has made a tough approach to China an important foreign policy platform.

While the Alipay payment app is currently unavailable for American users in the United States, according to a spokesperson for Ant, Trump administration officials fear China could access “sensitive banking data” belonging to future U.S. users.

A powerful security panel, known as the Committee on Foreign Investment in the United States (CFIUS), stopped Ant’s US$1.2 billion bid to buy the money transfer company Moneygram in 2018 over national security risks.

The U.S. State Department did not respond to a request for comment. Ant, an affiliate of Alibaba Group Holding Ltd., declined to comment but in a recent statement emphasized that only 5 percent of the company’s business is outside China.

The entity list, which makes it more difficult for U.S. 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 U.S. technology deals a blow to firms like Chinese telecom giant Huawei Technologies, which was added in May 2019, its impact on a fintech giant like Ant is likely to be more symbolic and does not prevent U.S. investors from taking stakes in the firm.

The administration has been largely loathe to use tougher tools against China, such as freezing assets in the United States, which many attribute to U.S. Treasury Secretary Steve Mnuchin’s dovish stance on Beijing.

Ant is China’s dominant mobile payments company, offering loans, payments, insurance and asset management services via mobile apps. Ant is 33 percent owned by Alibaba and controlled by Alibaba founder Jack Ma.

Ant’s Alipay payment platform, like Tencent’s WeChat platform, is used primarily by Chinese citizens with accounts in the yuan. Most of its U.S. interactions are with merchants accepting payment from Chinese travelers and businesses in the country.

Senator Marco Rubio, who has successfully urged the Trump administration to pursue investigations of Chinese companies, called last week for the U.S. Government to consider options to delay Ant’s IPO.

The impact of such blacklisting on firms seeking an IPO is evidenced by the failure of Chinese artificial intelligence firm Megvii Technology to clear a hearing with the Hong Kong exchange last November, en route to a planned listing of US$500 million. (SD-Agencies)