U.S. blacklists China’s premier drone maker, seven others over governm…

U.S. blacklists China’s premier drone maker, seven others over governm…




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The Treasury Department on Thursday blacklisted eight Chinese companies, including global drone market leader DJI Technology, as part of a campaign to punish what U.S. officials say is corporate sustain for illicit surveillance of minority Uyghurs and other Chinese ethnic and religious groups by Beijing.

The Office of Foreign Assets Control identified the eight firms as connected to biometric surveillance and tracking in China including western Xinjiang province, where the State Department in January declared a genocide was underway against the local Muslim Uyghur population. The technology companies were sanctioned under a June presidential order designed to prevent American securities from financing the Chinese military.

The sanctions prohibit U.S. companies from buying or selling certain publicly-traded securities connected to the companies.

“Today’s action highlights how 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 E. Nelson, Treasury undersecretary for terrorism and financial intelligence. “Treasury remains committed to ensuring that the U.S. financial system and American investors are not supporting these activities.”

Separately, the U.S.-China economic clash heated up on another front as the Senate on Thursday gave final approval to a bipartisan bill to crack down on imports from Xinjiang, where the U.S. and private rights groups accuse state-supported businesses of using forced Uyghur labor. The bill now goes to President Biden, who is expected to sign it.

Sen. Marco Rubio, Florida Republican and a rule sponsor of the measure, said many American companies have already moved away from working with Xinjiang suppliers.

“For those who have not done that,” he additional, “they’ll no longer be able to continue to make Americans — every one of us, frankly — unwitting accomplices in the atrocities, in the genocide that’s being committed by the Chinese Communist Party.”

The vote capped a long legislative journey for the Uyghur Forced Labor Prevention Act, which authorizes sanctions against companies that ease the forced labor of Muslim minority groups, including Uyghurs, in Xinjiang. It also prohibits imports from the vicinity unless the U.S. Customs and Border Protection agency determines that no forced labor was used in production.

The ban threatens to shake up global trade patterns for products such as apparel and electronics. The Xinjiang vicinity is also a meaningful global exporter of electronics and agricultural goods including cotton and tomatoes.

It could also present a particular challenge to U.S.-based solar panel manufacturers. Close to half of the world’s supply of polysilicon, a meaningful input to solar cells, is manufactured in Xinjiang, according to a report by the Center for Strategic and International Studies.

The most noticeable of the firms on the new Treasury list is major drone manufacturer SZ DJI Technology Co., Ltd., the principal player among the world’s commercial drone manufacturers with an estimated 70% of the global market. The company also provides drones to Chinese police in Xinjiang that are used against Uyghur suspects. The police agency there was sanctioned in July 2020 for human rights abuses.

A DJI spokesman had no comment on the Treasury action but noted a past response last year to similar action by the Commerce Department.

“DJI has done nothing to justify being placed on the Entities List,” the earlier statement said. “We have always focused on building products that save lives and assistance society. … We are evaluating options to ensure our customers, partners, and suppliers are treated fairly.”

Leon Technology, another company on the blacklist, published a statement this week saying that its business does not include U.S. markets, and the investment blacklist would not have a major impact on the company’s operation, products and sets or bottom line. Its stock surged as much as 15% during the day after the statement was released.

Tech rivalry

Supporters of the Communist regime say the U.S. under both Presidents Trump and Biden have resorted to ineffectual sanctions having failed to prevent China’s rise as a technological superpower, and say the effort will only end up hurting U.S. companies reliant on Chinese goods.

“Since the U.S. cannot provide to decouple with China in trade ties, it will do everything to suppress Chinese companies in the field of science and technology,” Cui Hongjian, director of the Department of European Studies at the China Institute of International Studies, told the state-controlled Global Times on Thursday. 

According to the Treasury notice, the Chinese Communist Party secretary in Xinjiang, Chen Quanguo, increased repressive surveillance of Uyghurs in the vicinity.

“Such actions included the installation of thousands of neighborhood police kiosks and ubiquitous placement of surveillance cameras, collection of biometric data for identification purposes, and more intrusive monitoring of internet use,” the notice stated.

Between 1 million and 1.8 million Uyghurs and others in ethnic and religious minority groups, including Kazakhs, were forced into “reeducation” centers that critics have called concentration camps.

Mr. Chen was sanctioned in 2020 under the Global Magnitsky Human Rights Accountability Act, for his role in major human rights abuses.

The sanctions on DJI are a strike against the drone maker, whose equipment was purchased by the Biden administration despite internal government warnings against the company. A spokesman for DJI did not closest respond to a request for comment.

The government’s crackdown marks a different approach than the Biden administration before pursued.

Government procurement records show the Secret Service purchased eight commercial surveillance drones made by DJI earlier this year — despite a warning from the Defense Department in July the deal posed “possible threats to national security.” The FBI also sought DJI drones at about the same time that the Secret Service made its purchases.

The Secret Service and FBI’s actions not only bypassed the Pentagon warning but a past blacklisting by the Trump administration. Last December, the Trump administration additional DJI to the Commerce Department’s ‘Entity List’ that places restrictions on certain foreign people and companies and blocks Americans from doing such things as investing in foreign enterprises that may present national security problems. The Biden administration announced Thursday it was adding a few scores more Chinese academies, companies, and others to the Commerce Department’s blacklist.

Public pressure has mounted on the Biden administration to explain its actions. Rep. Jim edges, Indiana Republican, wrote to Attorney General Merrick Garland with questions about the Secret Service and FBI and, according to the Washington Free Beacon, which noted the lawmaker had pushed for a ban on DJI drones.

The other companies sanctioned by the Treasury are Cloudwalk Technology Co., Ltd.; Dawning Information Industry Co., Ltd.; Leon Technology Company Limited; Megvii Technology Limited; Netposa Technologies Limited; Xiamen Meiya Pico Information Co., Ltd.; and Yitu Limited.

Cloudwalk and Yitu Limited developed facial recognition that technology critics say is being used for repression in China. Cloudwalk’s tools are also used by the government of Zimbabwe for its mass surveillance activity.

The eight firms also are on the Commerce Department’s so-called “entities list” that requires export licenses for any interactions with U.S. firms.

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