The US has placed DJI, a Chinese drone manufacturer, and seven other Chinese companies on an investment blacklist, putting even more pressure on the world’s second-largest economy’s enterprises.
Due to their actions in enabling human rights abuses against China’s Uyghur Muslims in Xinjiang and other ethnic and religious minorities, the US Treasury Department imposed investment restrictions on the companies on Thursday.
As a result, American investors will be unable to acquire or sell the companies’ stock.
“Today’s action highlights how private firms in China’s defence and surveillance technology sectors are actively cooperating with the government’s efforts to repress members of ethnic and religious minority groups,” said Brian Nelson, undersecretary for terrorism and financial intelligence. “Treasury remains committed to ensuring that the U.S. financial system and American investors are not supporting these activities.”
After being initially reported by the Financial Times earlier this week, the announcement was widely expected.
DJI and the other seven businesses are already on the US entity list, which means they can’t acquire or import American items or technology without special authorization.
The US Commerce Department put dozens of Chinese firms and organizations on that export blacklist on Thursday in an effort to limit China’s use of US technologies for military objectives and alleged human rights violations.
Treasury imposed comparable punitive measures against two Chinese legislators and a Chinese artificial intelligence firm, SenseTime, a week before the twin statements on Thursday.
Prior to the US Treasury’s announcement on Wednesday, the drone manufacturer declined to comment. Instead, it pointed CNN Business to a statement it made last December in response to earlier limitations, in which it maintained it had “done nothing to justify being placed on the entity list.”
DJI also stated at the time that it was “considering steps to ensure that our customers, partners, and suppliers are treated fairly,” but did not elaborate. This week, it refused to provide an update or comment on those plans.
The upstart drone firm, which is privately held and based in Shenzhen, may face financial difficulties as a result of Washington’s latest crackdown.
DJI has a slew of Silicon Valley heavyweights as investors, including Sequoia Capital China and Kleiner Perkins. Sequoia Capital China and Kleiner Perkins both declined to comment when asked if the limitation would make their investments more difficult.
Sequoia’s investment in DJI, however, is handled by Sequoia Capital China, which is a separate legal company from the US business, according to a source familiar with the situation.
That implies it would be unaffected by any restrictions on American investment in DJI, according to the source.
Recently, the United States has increased its pressure on Chinese businesses.
Last Friday, SenseTime, an artificial intelligence business, was added to the same US Treasury blacklist as DJI, two years after one of its companies was placed on the list.
SenseTime was also blocked by the Treasury Department because of its claimed participation in aiding human rights abuses against Uyghurs and other Muslim minorities in Xinjiang, according to the Treasury Department.
The allegations have been strenuously refuted by SenseTime. However, on Monday, the company postponed its Hong Kong stock market debut, which was set to begin trading as early as this week.
The company said the delay was necessary “to protect the interests of potential investors” and give them time to “evaluate the potential impact” of the US move on any investments.