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May 25, 2020

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US blacklists 33 Chinese firms as tensions escalate

The United States has said it would add 33 Chinese firms and institutions to an economic blacklist, citing “national security” and “human rights” issues.

The US Commerce Department said in a statement on Friday that it will add 24 Chinese governmental and commercial organizations to the Entity List “for engaging in activities contrary to the national security or foreign policy interests of the United States.”

The department also blacklisted seven Chinese companies and two institutions, accusing them of alleged involvement in “human rights violations” against ethnic groups in west China’s Xinjiang Uygur Autonomous Region.

The listings include Qihoo360, a Chinese cyber security firm that was delisted from the Nasdaq in 2015; Softbank Group Corp-backed CloudMinds that operates a cloud-based service to run robots; Center for High Pressure Science and Technology Advanced Research, Harbin Engineering University and Harbin Institute of Technology.

Being listed on the Entity List will result in restrictions over sales of US goods shipped to the companies and some more limited items made abroad with US content or technology. Companies can apply for licenses to make the sales, but they must overcome a presumption of denial.

Qihoo360, the largest cyber security firm in China, said it firmly opposes the irresponsible accusation, which lacks any credible evidence, and opposes the US Commerce Department’s move to politicize commercial activities and technological R&D.

According to Qihoo360, the 360 Cyber Security Brain, an advanced system that does intelligent upgrades of cyber security defenses developed by the company, has helped Apple, Google, and Microsoft discover thousands of security vulnerabilities and indirectly protected global netizens. The system has been highly praised by these companies. The 360 Cyber Security Brain has also helped US law enforcement agencies to crack down on global cyberattacks and is now widely recognized at the global stage.

The company said the US itself was involved in spying. In a brief post on March 2, Qihoo360 said that it had compared malware samples with a large number of CIA digital spy tools, and said that the CIA hacking group (APT-C-39) was behind it.

CloudWalk Technology, a Guangzhou-based developer of facial recognition software for the financial, public security and aviation sectors, said the company has made contingency plans following the latest US move.

“CloudWalk conducts business activities by strictly abiding to the laws and regulations of relevant countries and regions,” the company said. “CloudWalk has continued to maintain good cooperative relations with partners in China and other countries and jointly provide better services to users.”

The actions to expand the Entity List follow the same blueprint used by Washington in its attempt to limit the influence of the world’s top telecom giant Huawei Technologies for what it says are national security reasons.

“The US suppression targets not only Chinese enterprises but focuses more on industries,” said Bai Ming, deputy director of the Academy of International Trade and Economic Cooperation in the Ministry of Commerce. “The US tactic to strike the Chinese technology industry shows the characteristics of ‘a combination blow,’ among which non-business purposes become pronounced, sacrificing even the United States’ interest.”

“Do not think the US is only targeting tech giants like Huawei, it is also plotting to round up small and medium-sized ones that have potential to become bigger and stronger and knock them off collectively,” Bai added.

Bai said the US is escalating a trade fight because it wants to remove China from high-end manufacturing and keep the country locked in low- and mid-end production. “Particularly in high-end manufacturing, the US does not want China to enter this arena.”

“Especially with the way Chinese companies are developing, the US sees them as a threat instead of looking to cooperate to create something bigger and better. The US does not see it as a cake to be shared, but emphasizes more on wanting to have the whole cake for itself,” Bai said.


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