Alibaba In Talks To Invest $440M In US-Blacklisted Surveillance Firm With Chinese Partner: Report

Alibaba Group Holding Ltd BABA is investing $443 billion jointly with a Chinese partner in a blacklisted company accused of helping Beijing monitor and detain Uighur minorities, Reuters reported Tuesday.

What Happened: The Jack Ma-founded conglomerate, along with China Mobile Communications Group Co Ltd, is investing in China’s second-largest surveillance equipment maker Zhejiang Dahua Technology Co Ltd, people familiar with the matter told Reuters.

The two will invest in Dahua via private share placement in the coming weeks, according to the Reuters sources.

The deal assumes significance as the Chinese government reportedly plans to build over 500 smart cities, which will be surveilled upon by advanced technology networks that contain millions of cameras.

Why It Matters: Dahua is on a blacklist of companies that cannot purchase U.S. technology without the government’s approval, Reuters noted.

In April, Amazon.com, Inc AMZN reportedly purchased 1,500 cameras from Dahua in a deal worth almost $10 million to take worker’s temperatures amid the COVID-19 pandemic.

In June, the Senate passed a bill that may lead to the delisting of Chinese firms such as Alibaba and JD.Com Inc JD  from exchanges in the U.S.

Chinese companies listed in the U.S. have been carrying out secondary listings in Hong Kong and on the mainland as relations continue to worsen between the two countries.

This month Yum China Holdings Inc YUMC raised $2.2 billion in its secondary listing in Hong Kong, while JD.com had raised $3.9 billion in June.

Price Action: Alibaba shares closed nearly 1.4% higher at $277.96 on Tuesday.