The Treasury Department on Thursday blacklisted eight Chinese companies, including global drone market leader DJI Technology, as part of a campaign to punish what U.S. officials say is illicit surveillance of minority Uyghurs and other Chinese ethnic and religious groups by Beijing.
The Office of Foreign Assets Control identified the eight firms as linked to biometric surveillance and tracking in China including western Xinjiang province where the State Department in January declared a genocide was underway against the the Muslim Uyghur population in the region. The technology companies were sanctioned under a June presidential order designed to prevent American securities from financing the Chinese military.
The sanctions prohibit U.S. companies from buying or selling certain publicly-traded securities linked to the companies.
“Today’s action highlights how private firms in China’s defense and surveillance technology sectors are actively cooperating with the government’s efforts to repress members of ethnic and religious minority groups,” said Brian E. Nelson, Treasury 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,” he stated.
Among the eight firms is major drone manufacturer SZ DJI Technology Co., Ltd., the dominant player among the world’s commercial drone manufacturers with an estimated 70% of global market. The company also provides drones to Chinese police in Xinjiang that that are used against Uyghurs. The police agency there was sanctioned in July 2020 for human rights abuses.
A DJI spokesman had no comment on the Treasury action but noted a previous response last year to similar action by the Commerce Department.
“DJI has done nothing to justify being placed on the Entity List,” the earlier statement said. “We have always focused on building products that save lives and benefit society. DJI and its employees remain committed to providing our customers with the industry’s most innovative technology. We are evaluating options to ensure our customers, partners, and suppliers are treated fairly,” the statement said.
According to the Treasury notice, the Chinese Communist Party secretary in Xinjiang, Chen Quanguo, increased repressive surveillance of Uyghurs in the region.
“Such actions included the installation of thousands of neighborhood police kiosks and ubiquitous placement of surveillance cameras, collection of biometric data for identification purposes, and more intrusive monitoring of internet use,” the notice stated.
Between 1 million and 1.8 million Uyghurs and others in ethnic and religious minority groups, including Kazakhs, were forced into “reeducation” centers that critics have called concentration camps.
Mr. Chen was sanctioned in 2020 under the Global Magnitsky Human Rights Accountability Act, for his role in major human rights abuses.
The sanctions on DJI are a strike against the drone maker, whose equipment was purchased by the Biden administration despite internal government warnings against the company. A spokesman for DJI did not immediately respond to a request for comment.
The government’s crackdown marks a different approach than the Biden administration previously pursued.
Government procurement records show the Secret Service purchased eight commercial surveillance drones made by DJI earlier this year — despite a warning from the Defense Department in July the deal posed “potential threats to national security.” The FBI also sought DJI drones at about the same time that the Secret Service made its purchases.
The Secret Service and FBI’s actions not only bypassed the Pentagon warning but a previous blacklisting by the Trump administration. Last December, the Trump administration added DJI to the Commerce Department’s ‘Entity List’ that places restrictions on certain foreign people and companies and blocks Americans from doing such things as investing in foreign enterprises that may present national security problems. The Biden administration announced Thursday it was adding a few scores more Chinese academies, companies, and others to the Commerce Department’s blacklist.
Public pressure has mounted on the Biden administration to explain its actions. Rep. Jim Banks, Indiana Republican, wrote to Attorney General Merrick Garland with questions about the Secret Service and FBI and, according to the Washington Free Beacon, which noted the lawmaker had pushed for a ban on DJI drones.
The other companies sanctioned by the Treasury are Cloudwalk Technology Co., Ltd.; Dawning Information Industry Co., Ltd.; Leon Technology Company Limited; Megvii Technology Limited; Netposa Technologies Limited; Xiamen Meiya Pico Information Co., Ltd.; and Yitu Limited.
Cloudwalk and Yitu Limited developed facial recognition that technology critics say is being used for repression in China. Cloudwalk’s tools are also used by the government of Zimbabwe for its mass surveillance activity.
Dawning Information Industry operates mass data-collection systems, including those used by police and the Chinese military. The company’s subsidiary, known as Sugon, set up a cloud computing center in Urumqi, China that employs “predictive policing” in Xinjiang, the notice said.
Leon Technology built a surveillance system in Xinjiang and Megvii Technology developed software used against Uyghurs. Facial recognition data gathering is being used by Netposa Technologies that Treasury officials contend has been used to track over 2.5 million people in Xinjiang.
Xiamen Meiya Pico Information provided a mobile app that tracks images, audio files and location data, and messages cellphones. In Xinjiang, the company provided authorities with a Uyghur language translation and transcription tool.
The eight firms also are on the Commerce Department’s so-called “entities list” that requires export licenses for any interactions with U.S. firms.