By Tyler Durden
With both the US and China poking the geopolitical hornets’ nest that is Hong Kong on a daily if not hourly basis, as both sides appear content with the lack of tangible response from the other side to escalate actions in an apparent political race who has more global clout, after the close on Friday the US Department of Commerce said it would sanction a Chinese government institute and eight Chinese companies, mostly involved in “high-technology surveillance” for human rights abuses against Uighurs and other minorities in the country’s western Xinjiang region. As a result these entities “will face new restrictions on access to U.S. technology.”
The US identified China’s Ministry of Public Security’s Institute of Forensic Science and Aksu Huafu Textiles Co. for engaging in human rights violations and abuses in the Xinjiang Uighur Autonomous Region. An additional seven commercial entities made the list for enabling China’s high-technology surveillance in the XUAR: CloudWalk Technology; FiberHome Technologies Group and the subsidiary Nanjing FiberHome Starrysky Communication Development; NetPosa and the subsidiary SenseNets; Intellifusion; and IS’Vision.
“These nine parties are complicit in human rights violations and abuses committed in China’s campaign of repression, mass arbitrary detention, forced labor and high-technology surveillance against Uighurs, ethnic Kazakhs, and other members of Muslim minority groups in the Xinjiang Uighur Autonomous Region,” the Commerce Department said in a statement.
The Entity List additions restrict the export of U.S items subject to the Export Administration Regulations (EAR) to persons or organizations reasonably believed to be involved, or to pose a significant risk of being of becoming involved, in activities contrary to the national security or foreign policy interests of the United States. The EAR imposes additional license requirements on, and limits the availability of most license exceptions for, exports, re-exports, and transfers (in-country) to listed entities.
With the US starting to crack down on Chinese surveillance companies, in addition to telecom giants like Huawei, it is only a matter of time before the Trump administration also throws Hikvision, which has been a supplier to hundreds of government-led surveillance projects in major cities including Shanghai, Hangzhou and Urumqi, under the bus as well. For Beijing that may be a step too far, as Hikvision has morphed from a former Chinese government research institute since its 2001 founding into a $39 billion business specializing in professional video surveillance cameras. In fact, it is surprising this hasn’t already happened: around 42% of the company is controlled by state-owned enterprises, with China Electronics Technology HIK Group owning 39.6% of the company as the biggest shareholder.
China’s professional video surveillance equipment market, which accounts for 44% of all global revenue, grew by 14.7% in 2017, outpacing the rest of the world, which grew by only 5.5%. Hikvision had a leading share of 21.4% for the global closed-circuit television and video surveillance equipment market in 2017, according to IHS Markit.
The meteoric rise of Hikvision comes amid booming demand for public surveillance by the Chinese government. China’s Skynet Project – it’s real name – a national surveillance system aimed at “fighting crime and preventing possible disasters”, according to authorities, had more than 20 million cameras installed in public spaces in Chinese cities in 2017, while the Sharp Eye Project has extended the watch to rural areas across China, according to state media.
IHS Markit estimated that China had 176 million surveillance cameras in public and private areas in 2017, compared to only 50 million cameras in the US. The researcher expects China to install about 450 million new cameras by 2020.
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