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China’s Dahua Technology to Exit Projects in Xinjiang

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Zhejiang Dahua Technology (002236.SZ), a major Chinese video surveillance equipment maker, announced on Monday that it and its subsidiaries will terminate or exit five projects in China’s Xinjiang region. The projects, which were awarded between 2016 and 2017, include both terminated contracts and those still in operation, according to a filing with the Shenzhen stock exchange. Dahua confirmed it would cease operating the projects and initiate asset disposal and debt resolution procedures, but did not provide a specific reason for the withdrawal.

This move follows a similar decision by Hikvision (002415.SZ), another Chinese surveillance camera manufacturer, which also exited contracts with five Xinjiang local governments earlier this month, without disclosing the reasons.

Dahua’s exit comes amid heightened international scrutiny. The U.S. government added Dahua to its trade blacklist in 2019, accusing the company of involvement in “repression and high-tech surveillance” against Uyghur Muslims and other minority groups in Xinjiang. Dahua has consistently denied these allegations, arguing that the U.S. decision was not based on factual evidence. The Chinese government has also rejected claims of human rights abuses in the region and criticized companies that sever ties with firms operating there.

 

House Democrats Accuse GOP of Caving to Musk in Funding Bill

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House Democrats Jim McGovern of Massachusetts and Rosa DeLauro of Connecticut criticized their Republican colleagues for allegedly bowing to Elon Musk’s demands, which they claim led to the removal of a provision from a bipartisan government funding bill aimed at regulating U.S. investments in China.

In the aftermath of a separate stopgap funding bill passed over the weekend to prevent a government shutdown, McGovern took to X (formerly Twitter) to express his disappointment, stating that more could have been accomplished. He argued that the scrapped provision would have helped keep cutting-edge technologies like AI and quantum computing in the U.S. and preserved American jobs. However, he contended that Musk’s influence was a significant obstacle to this progress.

Musk’s companies, including Tesla and SpaceX, have extensive business dealings in China. Tesla operates a factory in Shanghai without a local joint venture, and it recently built a battery plant near the city. Musk is also pursuing self-driving vehicle technology development in China, which Democrats like McGovern claim could jeopardize U.S. security.

McGovern pointed out that Musk’s business interests depend on maintaining favorable relations with the Chinese government, writing that Musk is “bending over backwards to ingratiate himself with Chinese leaders.” Furthermore, Musk’s SpaceX has been reported to have withheld its Starlink satellite internet service over Taiwan at the request of Chinese and Russian authorities.

DeLauro, the top Democrat on the House Appropriations Committee, echoed concerns in a letter to Congress, criticizing Musk’s close ties with the Chinese Communist Party. She expressed alarm over Musk’s need for Chinese government approvals for his projects in the country and emphasized the potential risks of his growing influence.

Musk responded on X by calling DeLauro an “awful creature.”

The dispute unfolded as former President Donald Trump had expressed opposition to the original funding bill, instead seeking a new bill to raise the debt ceiling and avoid a financial showdown during the early months of his potential second term. Although Trump’s influence was felt in the discussions, the stopgap funding bill signed by President Joe Biden on Saturday did not include the debt ceiling suspension Trump had sought.

Musk, who acquired Twitter in 2022 and rebranded it as X, has since become a key supporter and adviser to Trump, contributing heavily to the 2024 campaign cycle.

 

US Asks Nvidia to Investigate Unauthorized Exports of AI Chips to China

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The U.S. Department of Commerce has reportedly asked Nvidia to investigate how the company’s artificial intelligence (AI) chips have ended up in China over the past year, according to a Thursday report by The Information. The investigation follows concerns over the potential unauthorized diversion of Nvidia products to Chinese entities, despite U.S. export restrictions.

Investigation into Distribution Channels

Nvidia has enlisted major distributors, including Super Micro Computer and Dell Technologies, to conduct spot checks of their customers in Southeast Asia. Nvidia’s AI chips are embedded in servers made by Super Micro and Dell, and the company is reportedly looking into how these chips may have been redirected to China without the required licenses.

The report suggests that multiple individuals involved in smuggling Nvidia chips have managed to evade detection during recent inspections conducted by Super Micro. The smuggling tactics reportedly involved duplicating serial numbers from Nvidia servers or altering them within the server’s operating system to disguise their origin.

Nvidia’s Response and Policies

In response, an Nvidia spokesperson reiterated the company’s commitment to adhering to U.S. export control regulations, stressing that any unauthorized diversion of its products would be detrimental to its business. Nvidia also insisted that its customers and partners must strictly follow these regulations, including prohibitions on grey market resales.

Both Dell and Super Micro have also emphasized their compliance with U.S. export laws. Dell stated that it requires all distributors and resellers to follow export controls and would sever relationships with any partner found to be non-compliant. Super Micro similarly asserted that it investigates and acts against any unauthorized exports, affirming its commitment to U.S. regulations.

Broader Context: U.S. Crackdown on Chinese Exports

This investigation comes as the Biden administration intensifies its crackdown on Chinese access to high-end AI chips. The U.S. government has already broadened its ban on the sale of advanced AI chips to China, including a move to limit semiconductor exports to 140 companies, including chip equipment makers, earlier this month. Despite these restrictions, there have been reports that Chinese universities and research institutions have still been able to procure Nvidia chips through resellers.