As a result, American investors will be barred from buying or selling shares of 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 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.”
Dozens of Chinese companies and organizations were added to that export blacklist by the US Commerce Department on Thursday, in a bid to limit China’s use of US technologies for military purposes and for alleged human rights violations.
Thursday’s twin announcements came a week after Treasury slapped similar economic sanctions against two Chinese politicians and a Chinese artificial intelligence firm, SenseTime.
The drone maker declined to comment ahead of the US Treasury’s announcement on Wednesday. Instead, it referred CNN Business to a previous statement made in response to earlier restrictions last December, when it said it had “done nothing to justify being placed on the entity list.”
DJI added at the time that it was also “evaluating options to ensure our customers, partners, and suppliers are treated fairly,” without elaborating further. It declined to provide an update or comment on those plans this week.
Washington’s latest clampdown could create financing headaches for the upstart drone maker, which is privately held and headquartered in Shenzhen.
But according to a person familiar with the matter, Sequoia’s investment in DJI is handled by Sequoia Capital China, which operates as a separate legal entity from the US firm.
That means it would likely not be impacted by any restriction barring American investment in DJI, the person said.
Turning up the heat
Washington has been piling pressure on Chinese companies recently.
Similarly, the Treasury Department said that the decision to block SenseTime was due to the role its technology allegedly played in enabling human rights abuses against the Uyghurs and other Muslim minorities in Xinjiang.
The firm said the delay was “to safeguard the interests of the potential investors of the company,” and allow them to “consider the potential impact of” the US move on any investments.
Separately, the FT reported earlier this week that US officials were deliberating whether to stiffen rules about selling to one of China’s top chipmakers. No action was taken Thursday, however.
SMIC did not respond to a request for comment.
Separately, last year the US Department of Defense also added the firm to a list of companies the agency claims are owned or controlled by the Chinese military. That decision means Americans are banned from investing in SMIC.
China’s Foreign Ministry criticized the United States on Wednesday after reports of Washington’s planned crackdown.
At a briefing, spokesperson Zhao Lijian called on the Biden administration to stop “politicizing” technological and economic issues by “generalizing the concept of national security.”
“Stop abusing state power to unreasonably oppress specific sectors and enterprises of China,” Zhao said, warning that sanctions on companies such as DJI would threaten global industrial and supply chains, and undermine international trade rules.
“China will, as always, firmly defend the legitimate rights and interests of Chinese companies,” he added.
— CNN’s Beijing bureau and Jill Disis contributed to this report.