US considers unprecedented sanctions on China tech giant Hikvision

Shares of Hikvision tumbled 10 per cent as the move was being considered. PHOTO: AFP

HONG KONG/WASHINGTON (BLOOMBERG) - The Biden administration is weighing whether to impose new sanctions on China's Hikvision Digital Technology.

It is considering adding the maker of cameras and surveillance systems to its Specially Designated Nationals and Block Persons List, according to people familiar with the situation, potentially the harshest measures so far against a major Chinese company.

Shares of the surveillance-technology giant tumbled 10 per cent as the move was being considered.

The sanctions would be related to alleged human rights violations by China against Muslim minorities in its far-western region of Xinjiang.

A final decision is unlikely this month, said one of the people, who declined to be identified as a decision isn't finalised. Hikvision's stock fell as low as 38.24 yuan (S$8) a share in Shenzhen after the holiday break, dropping by its daily limit.

Hikvision was already blacklisted by the US in 2019 along with seven other Chinese technology giants, making it more difficult for it to do business with American companies.

But the more severe sanctions under consideration would not just bar Americans from doing business with the company but also make its global customers potential targets of US action.

"It looks to be limited to Hikvision for now, but it creates fresh uncertainty in that in the future, successful Chinese companies could be targeted in this way," said Wai Ho Leong, a strategist at Modular Asset Management SP. The Financial Times earlier reported on the US deliberations. Hikvision said in a statement on Wednesday it will comply with applicable laws wherever it operates.

"The potential action by the US government, as reported, remains to be verified," it said. "We think any such sanction should be based on credible evidence and due process, and look forward to being treated fairly and unbiasedly."

A representative for the US National Security Council said it does not preview future sanctions.

Hikvision found itself in the cross-hairs of the Trump administration in 2019 after it joined other Chinese companies - including Huawei Technologies - on an Entity List that prevents American firms from supplying it with components and software.

The fresh, tougher sanctions would take the Biden administration's economic war against China in a new direction: it would be the first time a Chinese technology company has been added on the SDN list. It deals a potentially heavy long-term blow against Hikvision, as companies and governments around the world would be forced to reconsider their relationship with the camera provider.

Hikvision, whose cameras are used by agencies and corporations across Europe and Asia, is among the companies Beijing is counting on to spearhead advances into artificial intelligence. The company doesn't play a major a role in those ambitions but it's a key partner to Beijing as well as other governments.

Its cameras have been used in cities from Paris to Bangkok, and are considered pivotal to crime prevention as well as helping build "smart cities" or networked urban environments.

Thanks to cheap but capable cameras, the Chinese company has enjoyed rapid growth in recent years. Demand for its surveillance cameras, video storage and data analysis services has boomed particularly in its home market. Overseas, the company competes against Canon, Hanwha Techwin and Bosch.

"China firmly opposes the US moves to use human rights as an excuse, and abuse state power and its domestic law to hobble Chinese companies," China Foreign Ministry spokesman Zhao Lijian said on Thursday at a regular press briefing in Beijing.

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