U.S. blacklists Chinese artificial intelligence firms ahead of trade talks

The Trump administration is adding a group of Chinese tech companies that develop facial recognition and other artificial intelligence technology to a U.S. blacklist over concerns that the tech is being used to repress China's Muslim minority groups. 

The move comes ahead of trade talks between the U.S. and China later this week, which one analyst said sets a "negative tone" for the negotiations. The 28 companies added to the blacklist include Hikvision and Dahua, both of which are global providers of video surveillance technology, as well as prominent Chinese AI firms such as Sense Time, Megvii and iFlytek.

The Commerce Department on Monday placed the companies on a so-called Entity List for acting contrary to American foreign policy interests. The blacklist effectively bars U.S. firms from selling technology to the Chinese companies without government approval.

Commerce Secretary Wilbur Ross said in a written statement Monday that the U.S. government "will not tolerate the brutal suppression of ethnic minorities within China."

The decision to blacklist the companies just days before trade talks between the U.S. and China signaled to some analysts that the two global economies may not soon reach an agreement. At the same time, China signaled that its officials may not be willing to sign the broad trade deal sought by the Trump administration, Bloomberg News reports. 

"These news items support our view that a significant deal is unlikely in the coming months, and reinforce our view that negotiations are more likely to stretch through next year," Height Securities analysts wrote on Tuesday. 

Hikvision: "Misunderstandings"

Hikvision said in a statement Monday that it respects human rights and strongly opposes the Trump administration's decision. The company said it has spent a year trying to "clarify misunderstandings about the company and address their concerns," and that this will hurt its U.S. business partners.

Sense Time and Megvii are known for the development of computer vision technology that underpins facial recognition products, while iFlytek is known for its voice recognition and translation services.

Along with the tech companies, the Commerce Department's filing targets local government agencies in China's northwestern Xinjiang region.

"Campaign of repression"

The filing said the listed groups have been implicated in "China's campaign of repression, mass arbitrary detention, and high-technology surveillance" against Uighurs, Kazakhs and other predominantly Muslim minority groups.

Geng Shuang, a Chinese foreign ministry spokesman, said the U.S. has no right to interfere in Xinjiang's internal affairs and denied there are human rights issues in the region.

"This kind of behavior seriously violates the basic norms of international relations, interferes in China's internal affairs, and harms China's interests," he said. "The Chinese side strongly deplores and opposes it."

Megvii said Tuesday there are "no grounds" for including the company in the blacklist. Megvii said it received no revenue from projects in Xinjiang in the six months through June 30.

"We believe our inclusion on the list reflects a misunderstanding of our company," said a Megvii statement.

Huawei concerns

The Trump administration earlier this year used the same blacklisting process to punish Huawei, the Chinese telecom giant targeted by the U.S. over national security concerns. Added to the list in June were five Chinese groups working in supercomputing.

Ross said Monday's action will ensure U.S. technologies "are not used to repress defenseless minority populations."

China is estimated to have detained up to 1 million Muslims in prison-like detention centers in the region. The detentions come on top of harsh travel restrictions and a massive surveillance network equipped with facial recognition technology. China has denied committing abuses in the centers and has described them as schools aimed at providing employable skills and combating extremism.

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• Wilbur Ross
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