US blacklist to include China AI start-ups

American and Chinese officials are meeting as their 15-month trade war continues to roil markets.
American and Chinese officials are meeting as their 15-month trade war continues to roil markets.

The US government has widened its trade blacklist to include some of China's top artificial intelligence start-ups, 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 Ltd and Megvii Technology Ltd.

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 hard-line 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".

China said on Tuesday the United States should stop interfering in its affairs. It would 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 $US42 billion ($A62 billion), calls itself the world's largest maker of video surveillance gear.

SenseTime, valued about $US4.5 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 about $US4 billion and is preparing an IPO to raise at least $US500 million in Hong Kong.

The 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.

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 said, adding it was working on contingency plans.

John Honovich, founder of surveillance video research company IPVM, said Hikvision and Dahua used Intel Corp , Nvidia Corp, Ambarella Inc, Western Digital and Seagate Technology as suppliers and the impact on the Chinese companies would be "devastating".

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.

In August, the Trump administration also released an interim rule banning 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 US government's restrictions.

Australian Associated Press