Shares in Chinese Health Care Firms Plummet After Report That US Will Blacklist Biotech, AI firms

Shares of China’s biotechnology firms plunged on Dec. 15 amid concerns that the Biden administration would put an investment and export ban on more Chinese companies.

The decline was led by WuXi Biologics, which crashed nearly 20 percent on Wednesday, while Sino Biopharmaceutical dropped 5 percent.

The Hang Seng Healthcare Index was down 7.6 percent in late afternoon trade. The mainland index tracking the healthcare sector also slumped 3.2 percent, against a drop of 0.87 percent in the broader index.

The decline came after a Tuesday report from Financial Times, citing unnamed sources, that said the Biden administration would add two dozen Chinese companies, including unnamed biotechnology firms, to a trade blacklist known as the “entity list.”

Healthcare firms were already under pressure on Wednesday after Chinese biotech company BeiGene Ltd plunged on its Shanghai debut, amid worries that some Chinese firms could be ordered to delist from the U.S. stock market.

The Financial Times (FT) reported that the U.S. Treasury Department would separately put the world’s largest commercial drone manufacturer DJI and seven other Chinese tech firms to a U.S. investment blacklist for their involvement in Beijing’s mass surveillance of the Uyghurs in Xinjiang.

DJI has already been barred from buying or using U.S. technology or components after the Trump administration put it on the “entity list” a year ago for the same reason.

At the time, DJI said it had done nothing to justify the move and would continue to sell products in the United States, where it has built up a large market.

Other firms set to join the investment ban, according to FT, include image-recognition software firm Megvii, supercomputer maker Dawning Information Industry, facial recognition specialist CloudWalk Technology, cyber security group Xiamen Meiya Pico, artificial intelligence (AI) company Yitu Technology and cloud computing firms Leon Technology and NetPosa Technologies.

U.S. investors are barred from taking stakes in companies on the blacklist, which now consists of about 60 firms.

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Schoolchildren walking below surveillance cameras in Akto, south of Kashgar, in China’s western Xinjiang region on June 4, 2019. (Greg Baker/AFP via Getty Images)

Zhao Lijian, a spokesperson for China’s foreign ministry, when asked about FT’s report at Wednesday’s briefing, accused Washington of the “suppression” of Chinese companies. He said the regime would “closely follow the development of the situation.”

The report came days after the Biden administration put an investment ban on Chinese AI firm SenseTime over the same human rights concerns, forcing the company to postpone its planned $767 million Hong Kong initial public offering.

The Treasury Department on Dec. 10 also sanctioned Erken Tuniyaz, chairman of the Xinjiang Uyghur Autonomous Region, and his predecessor Shohrat Zakir for their role aiding Beijing’s abuses in the region.

Over one million Uyghur and other Muslim minorities have been incarcerated in internment camps in China’s far-western Xinjiang region, where they have been subjected to forced sterilization, torture, forced labor, and political indoctrination. The United States and other Western democracies have labeled Beijing’s actions a genocide.

Reuters contributed to this report.

From The Epoch Times