China's hot AI startup SenseTime says it is 'deeply disappointed' by US blacklisting

• Chinese AI startup SenseTime has said it is "deeply disappointed" that it was added to a US government blacklist that makes it harder for them to trade with US firms.
• SenseTime develops AI for use in a wide range of domains, including surveillance, image recognition, and medicine.
• On Monday, the Department of Commerce added 28 Chinese companies to the blacklist, which is known as the "Entity List."
• Federal Reserve officials were revealed to have voiced concerns over the ongoing trade war's possible effects on the US economy, after minutes from a September meeting were published Wednesday.
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Buzzy Chinese AI startup SenseTime has said it is "deeply disappointed" that the US recently decided to blacklist it.

In a statement on its website published Tuesday, the firm - which develops image recognition and surveillance tech for use in industries including medicine and transportation - said it "will work closely with all relevant authorities to fully understand and resolve the situation."

On Tuesday, the Department of Commerce announced it was adding 28 Chinese firms to its "Entity List" - a trading blacklist which forces US companies to seek government permission before they can do business with any firms listed on it.

According to Bloomberg, the DoC added the 28 companies to the blacklist because they are implicated in human rights violations against Chinese Muslims in Xinjiang, western China.

Read more: China piled up more than 100 tons of gold as a buffer against Trump's trade war

The blacklisting represents an abrupt change in fortune for SenseTime, which became one of the most valuable AI startups in the world in May 2018 after a huge $600 million fundraise saw it valued at $4.5 billion.

Another of the blacklisted firms, Hikvision, has also expressed dismay at the DoC's decision. On Wednesday, a Hikvision spokesman told Reuters that "punishing Hikvision, despite these engagements, will deter global companies from communicating with the US government, hurt Hikvision's US businesses partners and negatively impact the US economy."

Although the DoC's decision is likely to exacerbate US-Chinese tensions over trade, it was revealed Wednesday that the Federal Reserve expressed concerns over the trade war's potential impact on the US economy.

US and European stocks dropped on Tuesday, and according to a report from Bloomberg, China's Foreign Ministry has hinted at possible retaliation. When a journalist asked a Chinese Foreign Ministry spokesman if China would retaliate to the blacklisting, he replied "stay tuned," the report said.

Major investors are reportedly concerned, too. Amid the wave of disappointing tech IPOs in 2019, one major investor, Goldman Sachs, is reportedly reviewing its involvement in Megvii's planned listing after the tech firm was put on the list. The financial services firm told BBC News it was weighing up its role "in light of the recent developments."

Like SenseTime, the Beijing-based image recognition firm develops image recognition and deep learning for use in commercial and public-sector contexts. It has raised $1.4 billion to date, including a huge $750 million Series D raise in May that was led by the Bank of China.