U.S. Set to Ban American Investment in Some Chinese Companies

Companies being added to the list include commercial drone-making giant DJI Technology Co. and several leading developers of facial-recognition technology that have supplied products to China’s security agencies involved in the surveillance and detention of Uyghurs and other Muslim ethnic groups in the Xinjiang region.

In the draft announcement, the Treasury Department said the “action highlights how private firms in China’s defense and surveillance technology sectors are actively cooperating with the government’s efforts to persecute ethnic minorities.” The blacklisting, which was first reported by the Financial Times, prohibits Americans from investing in the companies.

A Treasury spokeswoman declined to comment or confirm the planned announcement.

Adam Lisberg, U.S. spokesman for DJI, said the company hasn’t seen any official notice of the blacklisting and so can’t comment on it. Last year, when DJI was placed on a separate Commerce Department blacklist for reasons similar to the Treasury’s planned action, the company said, “DJI has done nothing to justify” the penalty.

The Biden administration has broadened its efforts in recent weeks to limit Chinese technology companies’ access to U.S. investment, advanced machinery and other leading-edge technology. After being placed on the investment blacklist last week, SenseTime Group Inc., a Chinese developer of facial recognition technology, delayed its plans for an initial public offering of shares in Hong Kong.

U.S. officials are also considering adding more Chinese technology companies as early as Thursday to the separate Commerce Department list, which controls exports of U.S. goods and technologies, according to people familiar with the matter. One of the people said those additions to what is called the entity list target biotechnology and surveillance companies.

Most of the companies identified for blacklisting in the draft Treasury announcement have previously been placed on the Commerce entity list. Several of the companies were also previously listed by the Treasury Department in an advisory, serving in effect as a warning to other companies and investors that they should avoid them.

The investment blacklisting prohibits the purchase or holding of any securities, including derivatives of them, after a 60-day period to allow for existing holders to sell out of any holdings. It also prohibits the targeted firms from having any ownership stake in U.S. businesses, directly or indirectly.

Among the companies named in the draft announcement are Cloudwalk Technology Co., Megvii Technology Ltd., Netposa Technologies Ltd. and Xiamen Meiya Pico Information, which have provided facial-recognition and other technology to security agencies in Xinjiang.

China has conducted an extensive campaign of surveillance and detention of Uyghurs and other minorities in Xinjiang following sporadic violence that Chinese officials describe as terrorism.

The companies didn’t respond to requests for comment.

Separately, the U.S. also levied sanctions against a Chinese man and four companies that were among 25 foreign nationals, cartels and firms allegedly involved in drug trafficking. The penalties were issued in tandem with two new presidential executive orders meant to counter the threats officials say are posed by transnational criminal organizations. One order expands the administration’s authority to sanction international criminal groups while the other creates an interagency council on transnational organized crime.

A senior administration official said the Chinese individual was trafficking fentanyl, its precursor chemicals or other synthetic drugs.

U.S. officials say networks like the ones targeted Wednesday are often involved in other criminal activities and are working with terror groups and others at odds with U.S. interests.

Write to Kate O’Keeffe at [email protected] and Ian Talley at [email protected]