BLACKLIST GROWS
The US expands its trade blacklist to include some of China’s top AI startups.
WASHINGTON/SHANGHAI: The US government expanded its trade blacklist to include some of China’s top artificial intelligence startups on Monday, punishing Beijing for its treatment of Muslim minorities and ratcheting up tensions ahead of high-level trade talks in Washington this week.
The decision targets 20 Chinese public security bureaus and eight companies including video surveillance firm Hangzhou Hikvision Digital Technology Co Ltd, as well as leaders in facial recognition technology SenseTime Group Ltd and Megvii Technology Ltd.
The action bars the firms from buying components from US companies without US government approval — a potentially crippling move. It follows the same blueprint used by Washington in its attempt to limit the influence of Huawei Technologies Co Ltd for what it says are national security reasons.
US officials said the action was not tied to this week’s resumption of trade talks with China, but it signals no let-up in US President Donald Trump’s hardline stance as the world’s two biggest economies seek to end their 15-month trade war.
The Commerce Department said in a filing the “entities have been implicated in human rights violations and abuses in the implementation of China’s campaign of repression, mass arbitrary detention, and hightechnology surveillance against Uighurs, Kazakhs, and other members of Muslim minority groups.”
“The US government and Department of Commerce cannot and will not tolerate the brutal suppression of ethnic minorities within China,” said Secretary of Commerce Wilbur Ross.
China said the United States should stop interfering in its affairs.
“China will continue to take firm and resolute measures to protect its sovereign security,’’ Foreign Ministry spokesman Geng Shuang told a regular media briefing yesterday without elaborating.
Hikvision, with a market value of about $42 billion, calls itself the world’s largest maker of video surveillance gear.
SenseTime, valued at around $4.5 billion in a May 2018 fundraising, is one of the world’s most valuable AI unicorns while Megvii, backed by e-commerce giant Alibaba Group Holding Limited, is valued at around $4 billion and is preparing an IPO to raise at least $500 million in Hong Kong.
The other companies on the list are speech recognition firm iFlytek Co Ltd, surveillance equipment maker Zhejiang Dahua Technology Co Ltd, digital data forensics products maker Xiamen Meiya Pico Information Co Ltd and Yixin Science and Technology Co Ltd.
A US Hikvision spokesman said the company “strongly opposes” the decision and noted that in January it retained a human rights expert and former US ambassador to advise the company on human rights compliance.
“Punishing Hikvision, despite these engagements, will deter global companies from communicating with the US government, hurt Hikvision’s US businesses partners and negatively impact the US economy,” the company added.
Hikvision also said that it was assessing the potential impact of the blacklisting and was working on contingency plans.
John Honovich, founder of surveillance video research company IPVM, said Hikvision and Dahua both uses Intel Corp, Nvidia Corp, Ambarella Inc, Western Digital and Seagate Technology as suppliers and that the impact on the Chinese companies would be “devastating”.
SenseTime said in a statement it was deeply disappointed by the US move, that it abides by all relevant laws of the jurisdictions in which its operates and that it has been actively developing an AI code of ethics to ensure its technologies are used responsibly.
iFlytek said its placement on the blacklist would not affect its daily operations. “We have already anticipated this situation and will continue to provide excellent products and services for our customers.”
Xiamen Meiya said its overseas revenue was less than 1% of total revenue and that most of its suppliers were domestic companies.