After Huawei, US could blacklist Chinese surveillance tech firm

After Huawei, US could blacklist Chinese surveillance tech firm

SHANGHAI-Reuters
After Huawei, US could blacklist Chinese surveillance tech firm

The U.S. administration is considering Huawei-like sanctions on Chinese video surveillance firm Hikvision, media reports show, deepening worries that trade friction between the world's top two economies could be further inflamed.   

The restrictions would limit Hikvision's ability to buy U.S. technology and American companies may have to obtain government approval to supply components to the Chinese firm, the New York Times reported https://nyti.ms/2MfgBS3 on May 21.

The United States stuck Huawei Technologies on a trade blacklist last week, effectively banning U.S. firms from doing business with the world's largest telecom network gear maker, in a major escalation in the trade war.   

The United States has accused Huawei of activities contrary to national security, a charge Huawei denies. However, this week the Trump administration granted the tech giant a license to buy U.S. goods until Aug. 19 to minimize disruption for its customers.   

Huawei says it can ensure a steady supply chain without U.S. help. A Hikvision executive echoed a similar sentiment on May 22 but told Reuters that the company had not been informed of any possible U.S. blacklisting.   

"Even if the U.S. stops selling them to us we can remedy this through other suppliers," said the executive, who declined to be named due to the sensitivity of the matter. 

"The chips Hikvision uses are very commercial and most of the suppliers are actually in China," she said.   

The White House did not respond to a request for comment.   

Bloomberg, citing people familiar with the matter, reported the U.S. government was deliberating whether to add Hikvision, security equipment maker Zhejiang Dahua Technology and several other unidentified firms to a blacklist.   

A Dahua investment department employee declined to comment.   

Hikvision, with a market value of more than $37 billion, calls itself the world's largest video surveillance gear maker. Its products are used extensively in public places in China, from Beijing to Xinjiang.   

Headquartered in high-tech Hangzhou, one of China's richest cities, it sells close-circuit television products, traffic and thermal cameras, and unmanned aerial vehicles.         

Uighur Connection

Shares in Hikvision, 42% held by state-owned firms, opened 10% lower on May 22. It later pared some losses to trade down 6%. Dahua shares slumped as much as 9.2%.    

Jefferies analyst Rex Wu downplayed the impact of a possible ban on Hikvision, saying the United States accounted for roughly 5% of the company's sales.   

"Most AI solutions are sold to the government, public and enterprise sectors in China. Hikvision may be able to acquire GPU (graphics processing unit) via local distributors," Wu said.   

Hikvision and Dahua were specifically cited in a letter to U.S. President Donald Trump's top advisers last month, signed by more than 40 lawmakers, which called for tighter U.S. export controls over China's treatment of Muslim minority.   

The lawmakers said China's actions in its western region of Xinjiang "may constitute crimes against humanity".   

China has faced growing global condemnation for setting up facilities that U.N. experts describe as mass detention centres holding more than 1 million ethnic Uighurs and other Muslims.   

Beijing has said its measures in Xinjiang, which reportedly also include widespread surveillance, are aimed at stemming the threat of Islamist militancy. The camps that have opened are vocational training centres, it has said.   

In a separate email on May 22, a Hikvision spokeswoman said the firm took these concerns seriously and had since last October been engaging with the U.S. government on the subject.

U.S., China , Huawei, Hikvision, Dahua