The US blacklisted some of China’s most valuable AI startups over human rights issues in a dramatic trade war escalation

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The US blacklisted some of China's most valuable AI startups over human rights issues in a dramatic trade war escalation - The Reports

The US blacklisted some of China's most valuable AI startups over human rights issues in a dramatic trade war escalation - The Reports President of China Xi Jinping (left) and US President Donald Trump.Andy Wong/AP Photo

  • The US placed an additional 28 Chinese companies on a trade blacklist on Monday.
  • Among these 28 were eight major tech companies, including three AI startups valued at over $1 billion.
  • The Department of Commerce said the companies named were implicated in human rights violations, abetting the oppression of Uighur Muslims and other minorities in China.
  • Visit Business Insider’s homepage for more stories.

The US has dropped a fresh bombshell in its trade talk with China ahead of trade talks next week — this one targeting China’s tech sector.

The Department of Commerce announced on Monday that it was adding a fresh crop of 28 Chinese companies to its “Entity List” — a trading blacklist which forces US companies to seek government permission before they can do business with any firms listed on it.

The DoC cited human rights violations as its reason for banning the 28 companies. “Specifically, these 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,” it said.

Read more: 22 countries signed an “unprecedented” letter condemning China’s oppression of Muslims. But none of them come from the Islamic world.

On the list were eight tech companies, including three of China’s biggest AI startups — SenseTime, Megvii, and Yitu. SenseTime racked up a valuation of $4.5 billion last year, making it the world’s highest-valued AI startup, TechCrunch reported at the time. Megvii raised $750 million in May of this year, and filed for an IPO in Hong Kong in August. Yitu Technologies was most recently valued at just under $2.4 billion and was reported to be in the process of gearing up for an IPO as recently as last month.

The ban will cut the named companies off from potentially crucial American suppliers — Bloomberg notes that Nvidia supplies both SenseTime and Megvii, for example — and marks a fresh escalation in the ongoing geopolitical spat even as officials prepare to sit down to resume talks next week.

The US blacklisted some of China's most valuable AI startups over human rights issues in a dramatic trade war escalation - The Reports Megvii’s facial recognition tech has been implicated in the repression of the Uighur population before.Harrison Jacobs/Business Insider

SenseTime, Megvii, and Yitu are well-known for their work in facial recognition software. A New York Times investigation in April found the Chinese government was using a huge network of facial recognition software to track Uighur people, and named all three companies as participants in the programme.

Also on the DoC list was iFlytek Co, a voice-recognition company which The Financial Times reported in June was looking to raise between $300 million and $350 million to pour into AI.

Not all the tech companies listed are so AI-focused. Dahua Technology and Hikvision are prominent video surveillance companies. “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,” a Hikvision spokesman told Reuters.

The last two named tech companies on the list are Meiya Pico — a digital forensics and cybersecurity company — and Yixin Science and Technology, which Bloomberg reports provides big data analytics to China’s police force.

This isn’t the first time the Trump administration has slapped a major Chinese company with a ban. Smartphone giant Huawei was placed on the entity list in May of this year, with the US alleging that the company serves as a conduit to the Chinese government for spying. The ban has yet to come into full effect however, as the company was granted two 90-day reprieves.

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