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US blocks Chinese AI companies from working with US firms ahead of trade talks

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The US has blocked several Chinese AI start-ups including video surveillance firm Hikvision and SenseTime Group and Megvii Technology, which develop facial recognition, from working with US companies as the trade war between the two countries ramps up.

The block uses the same blueprint that the US has applied to Huawei, which has left it unable to work with major firms such as Google and Qualcomm.

In a filing released yesterday, the US Commerce Department said it would add a total of 28 entities to the trading blacklist because they 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”.

While it did not detail the specifics of the allegations apart from saying they were “activities contrary to the foreign policy of the United States,” China is known to have launched a high-tech surveillance apparatus to monitor and imprison minority groups in Xinjian.

The specific timing of the block coincides with high-level trade talks expected to take place in Washington this week, although officials denied that there was any correlation.

The firms will be barred from buying components from US companies without US government approval - a potentially crippling move.

“The US Government and Department of Commerce cannot and will not tolerate the brutal suppression of ethnic minorities within China,” said Secretary of Commerce Wilbur Ross.

Hikvision, with a market value of about $42bn, calls itself the world’s largest maker of video surveillance gear.

SenseTime, valued at around $4.5bn 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 at around $4bn and is preparing an IPO to raise at least $500m in Hong Kong.

The other companies on the list include speech recognition firm iFlytek, surveillance equipment maker Zhejiang Dahua Technology, digital data forensics products maker Xiamen Meiya Pico Information and Yixin Science and Technology.

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 business partners and negatively impact the US economy,” the company added.

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.

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