Trump’s latest China blacklist focuses on infrastructure, repression

Chairman of Hangzhou Hiklp Electronics Co., Ltd. Chen Zongnian delivers a speech during the 2nd World Intelligence Congress (WIC 2018) at Tianjin Meijiang Convention and Exhibition Center on May 16, 2018 in Tianjin, China.VCG | Visual China Group | Getty ImagesThe Department of Commerce added 28 new companies and agencies to its running “blacklist” of Chinese firms banned from doing business in the United States, with a notable focus on companies that specialize in artificial intelligence, machine learning and digital surveillance.The move has already hit suppliers to the companies named, and roiled markets Tuesday on fears of wavering trade talks.Together, the companies show clearly the direction Commerce will continue to take with its blacklist. Namely, it’s looking at Chinese companies that are already global, that provide tech infrastructure that is hard to replace once it’s been acquired, and that could feasibly be used to bolster China’s intelligence and military organizations.Blacklisting these companies should please some in the intelligence community who have long argued that allowing Chinese companies to provide technological infrastructure to the U.S. would undercut the ability of the U.S. to defend itself. But it will also create divides with commerce organizations focused on free trade, and will likely create further disruptions in the ongoing trade negotiations between the Trump administration and Chinese president Xi Jinping.Backing away from China-made infrastructureU.S intelligence agencies have been backing away from China-made infrastructure for well over a decade, with companies like Huawei and ZTE facing bans and skepticism.The companies on the new list aren’t as massive as Huawei, but they still are significant players in China’s technology growth and international expansion.Most of the names on the list aren’t familiar in the U.S., with the exception of Hikvision, which made headlines in 2017 after reports revealed the company, substantially owned by the Chinese government, had equipment installed across sensitive locations in the U.S., including military bases and government facilities. In a statement, a Hikvision spokesperson told CNBC via email, “Hikvision, as the security industry’s global leader, respects human rights and takes our responsibility to protect people in the U.S. and the world seriously.”Like Hikvision, another name on the list — Dahua Technology — is a large video surveillance and security camera company, with 35 global subsidiaries and a North America division.Other names on the new list represent other aspects of security and surveillance. They include: IFLYTEK, a voice recognition company that recently raised $350 million to invest in artificial intelligenceMegvii Technology, a facial recognition tech “unicorn” that filed to go public in Hong Kong in August. Megvii had been valued at around $3.5 billion.SenseTimem an artificial intelligence software-as-a-service platform with a valuation that recently passed $7.5 billion, with investment from backers including SoftBankMeiya Picom a digital forensics company that holds nearly half the marketshare for computer investigation services products in China. YITU, an A.I. research company that offers a wide-range of cloud-based facial recognition products. Yixin Technology, also known as Ecguard, an information security that provides equipment for everything from burglar alarms to large event security, firefighting and public transportation surveillance.The Commerce Department also included regional security agencies in the blacklist. Although they are less likely to be conducting significant business in the U.S. than the tech companies, their inclusion clarifies Commerce’s position against China’s surveillance and policing of expression of its own people. The regional entities on the list “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,” according to the Commerce Department.Follow @CNBCtech on Twitter for the latest tech industry news.

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