US Set to ‘Blacklist’ 5 Chinese Firms

US Set to ‘Blacklist’ 5 Chinese Firms

$CNY, $INTC, $QCOM

The Trump Administration is considering cutting off the flow of vital American technology to 5 Chinese companies including Hangzhou Hikvision Digital Technology Co., widening the dragnet beyond Huawei to include world leaders in video surveillance.

The US is deliberating whether to add Hikvision, Zhejiang Dahua Technology Co. and several unidentified others to a blacklist that bars them from US components or software, people familiar with the matter said.

The Trump Administration is concerned that Hikvision’s or Dahua’s cameras, which come with facial recognition capabilities, could be employed in espionage, the people said.

Such a move would escalate tensions with China and raises questions about whether the US is going after more of the country’s corporate champions.

Last week The Trump’s Administration barred Huawei Technologies Co. from American technology, a move that pummeled shares in US chipmakers from Qualcomm Inc. (NASDAQ:QCOM) to Intel Corp.(NASDAQ:INTC), and threatens to dampen global economic growth and disrupt the roll-out of critical next-generation wireless networks.

Chinese offshore RMB Yuan erased earlier gains after the report.

Shares of Hikvision and Dahua plunged in Shenzhen after the NY-T’s 1st reported on the potential ban.

The Trump Administration however has held off on taking action because of sensitive trade negotiations with China.

It is unclear which other companies may join Huawei on the ‘Entities List’, which prohibits the sale of American technology without a special license.

The Chinese firms Hikvision and Dahua are the world’s largest purveyors of surveillance hardware, along with smaller rival Yitu Technology.

Others such as SenseTime Group Ltd. and Face++ parent Megvii specialize in image processing software and are less reliant on American components.

The latest threat will elevate fears in Beijing that President Trump’s ultimate goal is to contain China, triggering a cold war between the world’s biggest economies, as Washington pressures allies and foes alike to avoid using Huawei for G5 networks that will power everything from self-driving cars to robot surgery, forming the backbone of a modern economy.

At the heart of Trump’s concerted campaign is suspicion that Chinese firms aid Beijing in global espionage while spearheading its ambitions of becoming a technology superpower.

The US Justice Department accuses Huawei also of willfully violating sanctions on Iran, and last year engineered the arrest of the eldest daughter of Huawei’s billionaire founder. Huawei has denied those allegations.

Hikvision, Dahua and other companies have benefited handsomely from Chinese President Xi unprecedented push to keep tabs on the country’s 1.4-B+ people. About 176-M video surveillance cameras monitored China’s streets, buildings and public spaces in Y 2016, Vs 50 million in America, according to IHS Markit.

Hikvision, the industry leader sells its cameras around the world. Its devices use artificial intelligence, enabling them to conduct facial recognition on a vast scale. That has helped it build a dominant position in a market that BIS Research says was worth $32-B in Y 2017 and will grow 16% a year through Y 2023. Along with Dahua, it’s a constituent of the MSCI Asia Pacific Index and is among Shenzhen stocks most owned by overseas investors.

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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