WASHINGTON, Feb 1 (Reuters) - U.S. investors including the investment arms of Intel Corp (INTC.O) and Qualcomm Inc (QCOM.O) accounted for nearly a fifth of investments in Chinese artificial intelligence companies from 2015 to 2021, a report showed on Wednesday. The document, released by CSET, a tech policy group at Georgetown University, comes amid growing scrutiny of U.S. investments in AI, Quantum and semiconductors, as the Biden administration prepares to unveil new restrictions on U.S. funding of Chinese tech companies. According to the report, 167 U.S. investors took part in 401 transactions, or roughly 17% of the investments into Chinese AI companies in the period. Those transactions represented a total $40.2 billion in investment, or 37% of the total raised by Chinese AI companies in the 6-year period. It was not clear from the report, which pulled information from data provider Crunchbase, what percentage of the funding came from the U.S. firms.

The US Commerce Department added them to a trade blacklist this week, saying the companies had been implicated in human rights violations against Uyghurs and other members of Muslim minority groups in Xinjiang. Twenty government and security bureaus in China's Xinjiang region were also included in the ban. Chinese authorities dismissed the human rights allegations, and threatened retaliation against US companies. "The US accusations against China are groundless and senseless. They only expose the evil motives of the United States to interfere with counterterrorism efforts in Xinjiang and thwart China's development," China's Foreign Ministry spokesman Geng Shuang said on Tuesday, telling reporters to "stay tuned" for retaliation.

Washington this week targeted Chinese facial recognition startups SenseTime, Megvii and Yitu over national security concerns and foreign policy interests, aggravating the clash between the two economic superpowers over who will dominate the technologies of the future. SenseTime is the second-most valuable artificial intelligence startup in the world, with investments from tech giants SoftBank (SFTBF) and Alibaba (BABA) and a private market valuation of $7.5 billion, according to CB Insights. Megvii and Yitu are worth $4 billion and $2.4 billion respectively, according to CB Insights. The three tech startups, along with a handful of other Chinese firms like AI-driven surveillance camera maker Hikvision and voice recognition firm iFlyTek, are now banned from buying US products or importing American technology. The US Commerce Department added them to a trade blacklist this week, saying the companies had been implicated in human rights violations against Uyghurs and other members of Muslim minority groups in Xinjiang.

Move threatens Chinese companies' access to crucial components, relationships with U.S. firms

Beijing sharply rebuked Washington on Tuesday for adding some top Chinese artificial intelligence startups to its trade blacklist, dimming hopes for progress in high-level talks aimed at ending a 15-month trade war between the two economic giants. U.S. and Chinese deputy trade negotiators were due to meet in Washington for a second day of talks on Tuesday, laying the groundwork for the first minister-level meetings in over two months later this week. A report from the South China Morning Post said China had tamped down expectations ahead of the talks scheduled for Thursday with Chinese Vice Premier Liu He, U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin, saying the Chinese delegation could leave earlier than planned because "there's not too much optimism." The mood soured this week after the U.S. Commerce Department widened its trade blacklist to include 20 Chinese public security bureaus and eight companies including video surveillance firm Hikvision, as well as leaders in facial recognition technology SenseTime Group Ltd and Megvii Technology Ltd.

The U.S. government expanded its trade blacklist to include some of China's top artificial intelligence startups, punishing Beijing for its treatment of Muslim minorities and ratcheting up tensions ahead of high-level trade talks in Washington this week. The decision, almost certain to draw a sharp response from Beijing, targets 20 Chinese public security bureaus and eight companies including video surveillance firm Hikvision, as well as leaders in facial recognition technology SenseTime Group Ltd and Megvii Technology Ltd. The action bars the firms from buying components from U.S. companies without U.S. government approval – a potentially crippling move. It follows the same blueprint used by Washington in its attempt to limit the influence of Huawei Technologies for what it says are national security reasons. U.S. officials said the action was not tied to this week's resumption of trade talks with China, but it signals no let-up in U.S. President Donald Trump's hard-line stance as the world's two biggest economies seek to end their 15-month trade war.

Visitors are tracked by face recognition technology from state-owned surveillance equipment manufacturer Hikvision at the Security China 2018 expo in Beijing. Hikvision is one of several firms that have been added to a U.S. trade blacklist. Visitors are tracked by face recognition technology from state-owned surveillance equipment manufacturer Hikvision at the Security China 2018 expo in Beijing. Hikvision is one of several firms that have been added to a U.S. trade blacklist. The Commerce Department has issued a list of 28 state security bureaus and tech companies in China that it says are being used to suppress the country's Uighur Muslims and other ethnic minorities – a move that blocks them from doing business with U.S. firms.