China’s top AI: To the blacklist

China’s top AI: To the blacklist

The US government has blacklisted some of China’s top artificial intelligence startups.

The U.S. government has broadened its trade blacklist to include some of China’s top artificial intelligence startups, ostensibly with a view to punishing Beijing for its treatment of Muslim minorities.

Yet the move is sure to increase tensions ahead of high-level trade talks in Washington this week.

The decision, heavily criticized by Beijing, targets 20 Chinese public security bureaus and eight companies, including video surveillance firm Hikvision, as well as leaders in facial recognition technology, namely SenseTime Group Ltd and Megvii Technology Ltd.

The action prohibits the listed companies and bureaus from buying components from U.S. companies without government approval. It comes on the heels of measures taken by Washington to limit the influence of Huawei Technologies Co Ltd [HWT.UL] on grounds of national security threats.

U.S. officials denied that the action was related to this week’s resumption of trade talks, but the move indicates that the 15-month trade war between the world’s two largest economies is far from over. 

The U.S. Department of Commerce stated that the “(blacklisted) 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.”

U.S. Secretary of Commerce Wilbur Ross added: “The U.S. Government and Department of Commerce cannot and will not tolerate the brutal suppression of ethnic minorities within China.”

Beijing responded publicly that the United States should stop interfering in its affairs. Foreign Ministry spokesman Geng Shuang told the media that China will continue to take a firm and resolute stance with regards to protecting its sovereign security

The companies affected

Hikvision, with a market value of about $42 billion, claims to be the world’s largest maker of video surveillance equipment.

SenseTime, valued at around $4.5 billion, is one of the world’s most valuable AI unicorns, while Megvii, backed by e-commerce giant Alibaba, is valued in the region of $4 billion and is preparing an IPO to raise at least $500 million in Hong Kong.

The other firms 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.

A U.S. Hikvision spokesman said the company “strongly opposes” the decision and stated that earlier this year it recruited a human rights specialist and former U.S. ambassador to advise the company on human rights compliance.

“Punishing Hikvision, despite these engagements, will deter global companies from communicating with the U.S. government, hurt Hikvision’s U.S. businesses partners and negatively impact the U.S. economy,” the company added.

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

In August, the Trump administration also released an interim rule prohibiting federal purchases of telecommunications equipment from five Chinese companies, including Huawei and Hikvision.

Huawei has repeatedly denied it is controlled by the Chinese government, military or intelligence services, and has filed a lawsuit against the U.S. government.


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Paul Imison
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