Chinese tech companies face more risks in expanding their businesses overseas this year after Donald Trump returns to the White House later this month, with more policies expected to curb the expansion of the industry, according to a UBS analyst.
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“As the new US government takes office, we expect that there will be more policies or news that will affect Chinese companies’ overseas businesses, including cross-border e-commerce, video gaming, and artificial intelligence,” Kenneth Fong, head of China internet research at UBS, said in a media briefing in Shanghai on Monday.
However, Chinese companies will continue to invest in overseas markets amid the geopolitical risks, he added.
Fong’s comments came days after the US Department of Defence added Tencent Holdings, China’s most valuable company, to its list of “Chinese military entities”, along with other tech companies including electric vehicle (EV) battery maker CATL and artificial intelligence (AI) champion SenseTime, raising concerns about further bifurcation in the technology spheres of the world’s two largest economies.
Chinese tech companies should worry about three things regarding geopolitical risks, according to Fong: the possibility of US companies being barred from investing in Chinese tech firms, potential additional restrictions on the purchase of AI chips, and the impact of trade tensions on their overseas businesses.
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While the Pentagon’s designation has no legal ramifications, analysts said it may give the US Treasury a reason to impose further sanctions and trade restrictions, which would make it harder for Tencent to buy certain products from US tech giants such as chip-design company Nvidia.