Aurelia Butler

The Biden administration will place eight Chinese companies including DJI, the world’s largest commercial drone manufacturer, on an investment blacklist for their alleged involvement in the surveillance of the Uyghur Muslim minority.The US Treasury will put DJI and the other groups on its “Chinese military-industrial complex companies” blacklist on Thursday, according to two people briefed on the move. US investors are barred from taking financial stakes in the 60 Chinese groups already on the blacklist.The measure marks the latest effort by US president Joe Biden to punish China for its repression of Uyghurs and other Muslim ethnic minorities in the north-western Xinjiang region. This week, SenseTime, the facial recognition software company, postponed its planned initial public offering in Hong Kong after the Financial Times reported that the US was set to place the company on the blacklist.The other Chinese companies that will be blacklisted on Thursday include Megvii, SenseTime’s main rival that last year halted plans to list in Hong Kong after it was put on a separate US blacklist, and Dawning Information Industry, a supercomputer manufacturer that operates cloud computing services in Xinjiang.Also to be added are CloudWalk Technology, a facial recognition software company, Xiamen Meiya Pico, a cyber security group that works with law enforcement, Yitu Technology, an artificial intelligence company, Leon Technology, a cloud computing company, and NetPosa Technologies, a producer of cloud-based surveillance systems.DJI and Megvii are not publicly traded, but Dawning Information, which is also known as Sugon, is listed in Shanghai, and Leon, NetPosa and Meiya Pico trade in Shenzhen. All eight companies are already on the commerce department’s “entity list”, which restricts US companies from exporting technology or products from America to the Chinese groups without obtaining a government licence. The White House did not comment and Treasury did not respond to a request for comment. DJI declined to comment. But last year, it said it had “done nothing to justify being placed on the entity list” after it was added to the commerce department’s export blacklist at the end of former president Donald Trump’s term. The commerce department is also expected to place more than two dozen Chinese companies on the entity list on Thursday, including some involved in biotechnology, according to the people familiar with the pending action. The commerce department did not respond to a request for comment.

The sanctions action comes as the US has maintained a tough stance over China’s policies in Xinjiang, where more than 1m Uyghurs and other minorities have been held in detention camps. The White House last week announced a diplomatic boycott of the 2022 Winter Olympics in Beijing.The Biden administration on Thursday will also consider tightening rules on US companies selling technology to Semiconductor Manufacturing International Corp, the largest Chinese chip manufacturer. The Trump administration put SMIC on the entity list a year ago, but the decision included a provision that critics said created a loophole that some companies had exploited.Eric Sayers, head of the Indo-Pacific practice at consultancy Beacon Global Strategies, said Biden was moving into the implementation phase after reviewing many of his predecessor’s technology policies.“It will be interesting to watch if these targeted but significant steps are just the beginning of a more aggressive approach being driven by the White House or the minimum the inter-agency can muster for now,” said Sayers. “If it’s the former, we could see further restrictions on SMIC and new outbound investment restrictions in the months ahead.”In another example of Washington’s escalating confrontation with Beijing over Xinjiang, the US House of Representatives unanimously passed a bill on Tuesday that would ban imports from the region unless companies could prove the goods were not produced with forced labour.The House and Senate earlier reached agreement on a compromise draft of the bill, setting the stage for a vote in the upper chamber of Congress before senators recess for the year-end holidays.The White House welcomed the agreement over the Uyghur Forced Labor Prevention Act.Sophie Richardson, China director at Human Rights Watch, called for Biden to “immediately” sign the legislation after it was passed by Congress. “Beijing and businesses have long banked on a global willingness to put profits ahead of humans’ rights — even in the face of crimes against humanity,” she said. “Congress rightly shifted the burden of proof to Xinjiang authorities and to companies.”Jewher Ilham, an activist whose father Ilham Tohti, an Uyghur rights advocate, was jailed for life by China on widely criticised charges of separatism, said it was “promising” that Congress had reached a deal to hold companies “accountable for their complicity in the world’s worst forced labour regime”.Additional reporting by Maiqi Ding in BeijingFollow Demetri Sevastopulo on Twitter More

HONG KONG (Reuters) – Financial institutions think business conditions in Hong Kong and mainland China will deteriorate in the coming years, although they plan to keep investing in both markets, a survey by an industry association found. The results suggest banks and asset managers are concerned about this year’s sweeping regulatory changes associated with President Xi Jinping’s “common prosperity” policy, though rules for financial institutions have largely remained unchanged. The survey published Wednesday by the Asia Securities Industry and Financial Markets Association (Asifma), which represents large global financial firms, showed 46% of their members expected the regulatory and operating environment in Hong Kong would become more challenging in the next three years and 37% said the same about mainland China. These were the only Asian markets where more respondents expected things to get worse than remain the same or improve.Nonetheless, 84% said they were expanding their operations on the mainland, and 54% in Hong Kong. In China, Asifma members “see a lot of positives when it comes to market development, but the fallout from ‘common prosperity’ is making life more challenging. Data is a good example, as is what is happening in the property market,” said Mark Austen, the group’s chief executive. Authorities are strengthening rules governing how companies must handle customer data, including restrictions on transferring information overseas, a challenge for financial firms wanting to integrate their Chinese and global businesses. “This goes beyond financial services, but they are collateral damage,” said Austen.Asifma has also pointed to Hong Kong and China’s strict quarantine and visa restrictions under their zero-COVID policies as additional challenges..Austen said financial firms in Hong Kong also feared legislation that would penalise financial institutions for enforcing foreign sanctions. There was also uncertainty about how a National Security Law imposed on Hong Kong last year by Beijing would affect financial services. More

But he said the central bank would maintain its ultra-loose monetary policy to ensure any rise in prices would be accompanied by higher wages and a recovery in the economy.”I don’t think Japan’s economy is in a state of stagflation,” Kuroda told parliament. More

SAN FRANCISCO (Reuters) – The U.S. agency charged with defending the country against hacking said on Tuesday the majority of attacks it has seen using a recently disclosed flaw in widely used open-source software were minor, with many of them seeking to hijack computing power to mine cryptocurrency.Officials at the Cybersecurity and Infrastructure Security Agency said they had not confirmed reports by multiple security companies of ransomware installations or attempts by other governments to steal secrets.“We are not seeing widespread, highly sophisticated intrusion campaigns,” Eric Goldstein, executive assistant director for cybersecurity at CISA, said in a call with reporters.But he warned the threat would continue to evolve and the agency was still working to assemble reliable information on what types of software were subject to the attacks.He said it was possible widespread consumer devices such as routers were vulnerable and his unit within the Department of Homeland Security was working with vendors to have them deploy fixes where needed.The flaw was found in a common logging tool, known as Log4j, and it is carried forward by at least hundreds of other programs that rely on the tool. Goldstein said the flaw is easy to exploit.Although a patch in the tool has been available since Dec. 6, many of those other programs also have to implement the patch to ensure an attacker cannot get deep network access.Under recently granted powers, CISA has directed all federal agencies to install patches as they become available.Goldstein said there have been no reports of intrusions using the vulnerability in the government, but CISA expects “all manner of adversaries” to seek to exploit the flaw.The logging function allows users to submit live code referring to an outside repository, which the program will then seek out and install. Hackers can use that to take control of the servers, which may have access to other machines with more valuable data or network powers.Though the flaw has existed in the free Log4j program for years, it was recently discovered by a researcher at Chinese tech company Alibaba (NYSE:BABA) and reported to the group of volunteers who maintain the program. Open discussion within the Chinese security company was detected and some exploitation of the flaw began before the Apache (NASDAQ:APA) Software Foundation could issue the patch.Goldstein said it was “concerning” any time a flaw is exploited before a patch is out. Under recent Chinese regulations, some security professionals must report their findings to the government quickly, often before patches are ready. More

It has been two weeks since the doors to the Chinese market slammed shut to Lithuanian products. Accounting for just 0.2 per cent of global exports, the Baltic nation’s problem is negligible for the rest of the world. But it is just the latest example of China wielding a weapon against which other countries have yet to find a shield: coercive economic statecraft.Beijing has been targeting foreign companies or industries to “punish” their governments for policies with which it disagrees. Measures have included a suspension of rare earth exports to Japan after a maritime clash off the disputed Senkaku Islands, a curb on Norwegian salmon imports after the awarding of the Nobel Peace Prize to dissident Liu Xiaobo and a ban on Australian wine and barley imports in retaliation for Canberra’s demand for an inquiry into the origins of Covid-19.In the same vein, after Lithuania allowed a Taiwanese representative office to open in Vilnius, it disappeared from the Chinese Customs Administration’s country list on December 1, making it impossible for companies to file customs paperwork.“Every country uses economic coercion in some way — the US has a whole sanctions regime,” said Emily Kilcrease, at the Center for a New American Security, a Washington think-tank.But, she noted, democracies are at a disadvantage: under its authoritarian system, Beijing can target companies or products without invoking any related laws to justify its actions.When South Korea deployed a US anti-missile system in 2016, Chinese travel agents stopped group tours to the country, and the Chinese public turned against South Korean pop songs and soap operas. In both cases, it would have been hard to hold the Chinese government to account.“Such off-book measures, of which China has a whole range, are not something the US or other democratic countries can use because they go back to the party’s control over the economy,” says Kilcrease, co-author of a new report on how other countries can respond to Chinese economic coercive economic statecraft. “In the US we are constrained by the legal authority we have in place.”Turning to the World Trade Organization’s dispute settlement mechanism can take years to yield a result, and may not even be an option because governments lack proof that the Chinese authorities are behind a boycott or import disruption.Just a week after the initial blockage of its exports, Lithuania’s name reappeared in China’s customs menu. However, Lithuanian shipments are still not being cleared.“Customs brokers are receiving ‘error’ reports from the IT system when they try to process the shipments. This is the case at different ports, and for all types of products,” the European Commission said, adding that Chinese companies were also cancelling orders of Lithuanian products without explanation.Observers say Beijing wants to warn others. Shi Yinhong, a foreign policy expert at Renmin University, said that both Lithuania and Australia remained defiant towards Beijing. “But not taking punitive action would increase the likelihood of other countries taking similar steps like establishing relations with Taiwan etc, and it would be difficult to explain that to the people at home,” he said.

European observers agree. Joerg Wuttke, president of the EU Chamber of Commerce in China said the measures had “no immediate impact on multinational corporations” because there was virtually no sourcing from Lithuania. “But it is a stark warning for other EU countries not to follow the Lithuanian example,” he said. “The Czech and Slovakian economies, for example, are deeply embedded into the German car supply chains.”Both central European countries have recently stepped up contacts with Taipei as the region’s enthusiasm over the benefits of close relations with China is waning. The EU has threatened to take China to the WTO if all obstacles preventing Lithuanian exports from accessing the Chinese market are not removed. Brussels has also presented an “anti-coercion instrument” with which it wants the EU to retaliate against such economic coercion.But analysts are sceptical because China’s position as the world’s second-largest economy gives it massive clout.Even its punitive measures tend to also do some damage at home, Shi predicted: “Chinese countermeasures against such countries will become more and more and more frequent and more and more forceful.”

Video: How China uses trade as a weapon More

“Although dented slightly due to pandemic-related concerns, households’ interest rate expectations are at levels where the Bank of England have historically hiked,” said Lewis Cooper, an economist at IHS Markit which commissioned the poll.Market researchers Ipsos MORI surveyed around 1,500 working-age people in Britain between Dec. 2 and Dec. 6.Some 67% of people expected the BoE to raise its main interest rate from its current record-low 0.1% within six months, up from 66% in November’s survey and the highest percentage since the series began in 2013.But the proportion expecting a move within three months fell to 43% from 44%, and just 12% expect a rise when the BoE announces its December policy decision on Thursday.Last month the BoE wrongfooted many professional investors when it kept interest rates on hold and decided to wait for more evidence on the impact of the end of the government’s job furlough programme. More