US expands blacklist to include China’s top AI startups ahead of trade talks

WASHINGTON/SHANGHAI: The US government widened its trade blacklist to include some of China’s top artificial intelligence startups, punishing Beijing for its treatment of Muslim minorities and ratcheting up tensions ahead of high-level trade talks in Washington this week.

The decision, which drew a sharp rebuke from Beijing, targets 20 Chinese public security bureaus and eight companies including video surveillance firm Hikvision, as well as leaders in facial recognition technology SenseTime Group and Megvii Technology.

The action bars the firms from buying components from US companies without US government approval – a potentially crippling move for some of them. It follows the same blueprint used by Washington in its attempt to limit the influence of Huawei Technologies 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 high-technology 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. It will continue to take firm and resolute measures to protect its sovereign security, foreign ministry spokesman Geng Shuang told a regular media briefing 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, is valued at around $4 billion and is preparing an IPO to raise at least $500 million in Hong Kong.

Other companies on the list are speech recognition firm iFlytek Co, surveillance equipment maker Zhejiang Dahua Technology, data recovery firm Xiamen Meiya Pico Information Co, facial recognition firm Yitu Technology and Yixin Science and Technology Co.

The blacklisting of Huawei has hurt many of its US suppliers that depended on the world’s largest telecommunications company for revenue and made it difficult for Huawei to sell new products.

“China’s stock market has become increasingly immune to bad news from the trade war. No more panic selling,” said Stephen Huang, Vice President of Shanghai See Truth Investment Management.

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