The U.S. on Thursday blocked American investors from making investments in eight Chinese surveillance and military-industrial firms, and restricted exports to dozens of entities, some of which are involved in Beijing’s efforts to develop biotechnology for military applications.
The moves, by the U.S. Departments of Treasury and Commerce, come as the U.S. continues to home in on Chinese human rights abuses, including the tracking of ethnic and religious minorities in the far-western region of Xinjiang. The U.S. has used a variety of measures, including sanctions, import bans and export restrictions, to address the situation there, but American technology found its way into the 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, as well as ensuring that the U.S. financial system and American investors are not furthering 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 U.S. government and, more recently, a U.K.-based tribunal has called a genocide.
Earlier this month, the Treasury sanctioned the current and former chairmen of the Xinjiang region, citing their roles in human rights abuses. The U.S. State Department issued visa bans on them and their families. And Congress passed legislation barring imports of goods produced using forced labor in the region; President Joe Biden is expected to sign it into law.
On Thursday, the Treasury added eight firms to its list of Chinese military-industrial complex companies, blocking Americans from making investments in any of them. All eight companies or their subsidiaries were already subject to export restrictions imposed by the Commerce Department, according to a review by Kharon.
“Private firms in China’s defense and surveillance technology sectors are actively cooperating with the government’s efforts to repress members of ethnic and religious minority groups,” said Brian Nelson, the undersecretary of Treasury for terrorism and financial intelligence. “[The] Treasury remains committed to ensuring that the U.S. financial system and American investors are not supporting these activities.”
Thursday’s listings also follow the move earlier this month against facial recognition firm SenseTime Group Limited, which led the company to shelve its initial public offering (IPO). (SenseTime revived its IPO and trading will debut Dec. 30, but U.S. investors are blocked from participating, CNN reported, citing securities filings in Hong Kong and a company statement.)
SZ DJI Technology Co., Ltd., one of the world’s largest drone makers, had provided devices to the Xinjiang Public Security Bureau (PSB) for the surveillance of Uyghurs, the Treasury said. Leon Technology is one of the key companies that helped the Chinese government build the Integrated Joint Operations Platform (IJOP), a Xinjiang surveillance system, 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 China, including in a mass surveillance network installed in Zimbabwe, according to the Treasury.
DJI was added in late 2020 to the Commerce Department’s export restrictions list; the PSB was sanctioned in July 2020 and added to the export controls list in October 2019. Leon was listed by the Commerce Department 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 of which were listed Thursday by the Treasury, fell under the export restrictions in October 2019. They each operate in China’s surveillance sector 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 uses, including for the development of nuclear and hypersonic weapons testing by the People’s Liberation Army (PLA), the Treasury said. It has been restricted from receiving U.S. 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 Commerce Department announced export restrictions on dozens of entities in China, including players in the biotech sector, due to their support of the military.
“The scientific pursuit of biotechnology and medical innovation can save lives,” said U.S. Secretary of Commerce Gina M. Raimondo. “Unfortunately, the [Chinese government] is choosing to use these technologies to pursue 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 were listed because they use biotechnology processes to support Chinese military end uses and military end users, including for “purported brain-control weaponry,” the Commerce Department said.
AMMS jointly holds patents for tests that screen for genomes 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 testi kit to detect respiratory pathogens, including coronaviruses, the report said. Two BGI subsidiaries were added to the export controls list in July 2020, but two U.S. lawmakers this fall called for BGI to be named as a Chinese military-linked company.
Another firm listed Thursday by the Commerce Department, Jiangsu Hengtong Marine Cable Systems Co., Ltd., was involved in China’s National Seabed Scientific Observation Network, Kharon reported in January. Hengtong Marine Cable Systems owns a 51 percent stake in HMN International Co. Ltd, which was also listed Thursday, Hong Kong corporate records show.
HMN was previously 51 percent owned by a subsidiary of Chinese network equipment giant Huawei Technologies, which has been indicted, listed by the Treasury as a military-industrial firm and subject to U.S. export controls for business with embargoed countries, according to corporate records in Hong Kong. Also Thursday, the Commerce Department revised its listing of Huawei, adding three new aliases under one of its affiliated entities: Huawei Marine Networks.
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