US blocks investment in Chinese surveillance and military-industrial companies

The United States blocked Thursday American investors to make investments in eight Chinese surveillance and military-industrial companies, and restricts exports to dozens of entities, some of which are involved in Beijing’s efforts to develop biotechnology for military applications.

Actions taken by the US Treasury and Commerce Departments, come as the United States continues to focus on China’s human rights abuses, including the stalking of ethnic and religious minorities in the far west region of Xinjiang. The United States has used various measures including sanctions, import bans and export restrictions to remedy the situation there, but American technology has made its way into surveillance operations, Kharon reported in 2020.

“We are committed to promoting respect for the human rights of members of minority groups in [China] and elsewhere, while ensuring that the US financial system and US investors do not encourage these activities, ”said Secretary of State Antony Blinken.

Since 2017, authorities in Xinjiang have detained between 1 million and 1.8 million Uyghurs and members of other minority groups, an act that the US government and, more recently, a UK-based court ruled genocide.

Earlier this month, the Treasury sanctioned the current and former president of the Xinjiang region, citing their role in human rights violations. The US State Department has issued visa bans for them and their families. And Congress passed legislation banning imports of goods produced using forced labor into the region; President Joe Biden is expected to sign it.

Thursday, the Treasury added eight companies to his list of Chinese companies in the military-industrial complex, preventing the Americans from investing in one of them. The eight companies or their subsidiaries were already subject to export restrictions imposed by the Commerce Department, according to a review by Kharon.

“Private companies in China’s defense and surveillance technology sectors are actively cooperating with government efforts to suppress members of ethnic and religious minority groups,” said Brian Nelson, Under Secretary of the Treasury for Terrorism and Financial Intelligence . “[The] The Treasury remains committed to ensuring that the US financial system and US investors do not support these activities. “

Thursday’s announcements also follow the movement earlier this month against facial recognition company SenseTime Group Limited, which led the company to suspend its initial public offering (IPO). (SenseTime has relaunched its IPO and trading will begin on December 30, but U.S. investors are not allowed to participate, CNN reported, citing Hong Kong securities filings and a company statement.)

SZ DJI Technology Co., Ltd., one of the world’s largest drone manufacturers, had provided devices to the Xinjiang Public Security Bureau (PSB) for Uyghur surveillance, the Treasury said. Leon Technology is one of the key companies that has helped the Chinese government build the Integrated Joint Operations Platform (IJOP), a surveillance system in Xinjiang, the Treasury said.

Products made by CloudWalk Technology, which developed facial recognition software designed to track members of ethnic minority groups, have been used outside of China, including in a mass surveillance network set up in Zimbabwe, according to the Treasury. .

DJI was added to the Commerce Department’s list of export restrictions in late 2020; the PSB was sanctioned in July 2020 and added to the export control list in October 2019. Léon was listed by the Department of Commerce in July 2021, and CloudWalk was added in June 2020.

Megvii Technology Limited, Netposa Technologies Limited, Xiamen Meiya Pico Information Co., Ltd. and Yitu Limited, all listed on Thursday by the Treasury, were subject to export restrictions in October 2019. They each operate in China’s surveillance industry and provide technology that has been used to track Uyghurs, according to the Treasury.

Dawning Information Industry Co., Ltd. provides big data systems for national defense and security purposes, including the development of nuclear and hypersonic weapons tests by the People’s Liberation Army (PLA), the Treasury said. It has been banned from receiving US exports since June 2019 under the name Sugon, an alias. Sugon built the Urumqi cloud computing center, which is used to monitor individuals in Xinjiang, according to the Treasury.

Separately on Thursday, the Ministry of Commerce export restrictions announced on dozens of entities in China, including players in the biotechnology sector, because of their support for the military.

“The scientific pursuit of biotechnology and medical innovation can save lives,” said US Secretary of Commerce Gina M. Raimondo. “Unfortunately, the [Chinese government] chooses to use these technologies to exercise its control over its people and its repression of members of ethnic and religious minority groups.

The Academy of Military Medical Sciences (AMMS) and 11 of its research institutes have been listed because they use biotechnological processes to support Chinese military end-uses and military end-users, including for “so-called control weapons.” of the brain, ”the Commerce Department said.

AMMS jointly holds patents for genome screening tests with BGI Group, the world’s largest genomics company, Reuters reported in January. One of the patents, granted in 2015, was for a low-cost testis kit to detect respiratory pathogens, including coronaviruses, according to the report. Two BGI subsidiaries have been added to the export control list in July 2020, but two U.S. lawmakers this fall called for BGI to be named as a company linked to the Chinese military.

Another company listed on Thursday by the Commerce Department, Jiangsu Hengtong Marine Cable Systems Co., Ltd., participated in the national scientific observation network of the seabed of China, Kharon reported in January. Hengtong Marine Cable Systems owns a 51% stake in HMN International Co. Ltd, which was also listed on Thursday, according to Hong Kong records.

HMN was previously 51% owned by a subsidiary of Chinese network equipment giant Huawei Technologies, which was indicted, listed by the Treasury as a military-industrial enterprise and subject to export controls for business with embargoed countries, according to company records in Hong Kong. Also on Thursday, the Commerce Department revised its list of Huawei, adding three new aliases under one of its affiliates: Huawei Marine Networks.

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