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Trade war

China's Hikvision braces for inclusion on US export blacklist

Surveillance equipment maker faces threat of ban as Washington looks to expand targets

WASHINGTON (FT) -- Hikvision, the Chinese surveillance equipment maker, is bracing for Donald Trump to place it on a US export blacklist, as Washington moves to expand its trade war against Beijing to include sweeping curbs on Chinese technology companies.

Last week, following the breakdown in trade negotiations between the US and China, Mr Trump made a high-profile move to ban US companies from selling products to Huawei, the Chinese telecommunications equipment maker, without a licence from the commerce department.

But the Trump administration does not appear to be stopping at Huawei, and is weighing similar moves against a handful of other Chinese companies that produce advanced technology products, including Hikvision.

One person close to Hikvision, which has been criticised for providing surveillance networks to the Chinese government in the western region of Xinjiang where Beijing has been accused of human rights abuses, suggested the company was aware that it could be among Mr Trump's next targets.

"Obviously, it's a possibility that it may happen, obviously it's a possibility that it doesn't happen - the company doesn't know," the person said.

On Tuesday, The New York Times reported that Hikvision was facing a possible designation on the commerce department's so-called "entity list" of companies with which US groups are severely restricted from doing business.

According to one lawyer working in the field of US export controls, the US government could add Hikvision to that group based both on human rights concerns and for national security reasons, given the nature of the cameras and facial recognition technologies developed by the company.

In a statement, Hikvision said it took "these concerns very seriously and has engaged with the US government regarding all of this since last October".

It added that it had hired Pierre-Richard Prosper, a former US ambassador-at-large for war crimes under George W Bush and a Los Angeles-based lawyer at Arent Fox, to advise on "compliance" related to human rights.

One person close to the company said Mr Prosper had been mandated to "look into the various contracts, projects and decision-making associated with those and give [Hikvision] a view into areas that could be of concern, areas where they did the right thing, and areas that are less clear".

At the same time, Mr Prosper would "give guidance for the future, in any situation, in China or elsewhere, on how to best position themselves so they don't face these types of risks going forward".

But while Hikvision might have hoped to avoid a hit from the Trump administration because of this effort, the rapid deterioration in trade relations between Washington and Beijing means the company may have little time to make its case to US officials.

Hikvision and Huawei are not alone in facing this kind of pressure. According to Bloomberg News, the Trump administration is considering Chinese companies Dahua, Megvii, iFlytek and Meiya Pico for the commerce department's blacklist.

Dahua did not respond to a request for comment.

Megvii said: "We are not aware of being on any US government list. Unfortunately, the current geopolitical climate leads to inaccurate and unhelpful speculation about individual companies."

Meanwhile, iFlytek said it was aware of media reports about the blacklist but had not received any official confirmation from the US government. It said while it hoped "to be treated just and fairly by the US government", it had made "alternative plans against extreme situations".

Meiya Pico told Chinese media it had received no confirmation of inclusion on the blacklist.

The commerce department declined to comment. DJI, a Chinese drone maker, may also be in the Trump administration's crosshairs. A DJI spokesman said: "We don't comment on speculation and we are monitoring the situation."

On Monday, the US department of homeland security issued a warning about the use of Chinese drones, saying it had "strong concerns about any technology product that takes American data into the territory of an authoritarian state that permits its intelligence services to have unfettered access to that data or otherwise abuses that access".

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