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The Hikvision stock plunged into the daily limit of 10% during morning trading in Shenzhen. He recovered some of these losses at nearly 6% less.
This would be Washington's latest attempt to reduce Beijing's technological ambitions and lead to further escalation of the US-China trade war.
"Hikvision takes these concerns very seriously and has been in contact with the US government since last October," a spokesman for the company said in a statement released on Wednesday.
"In addition, Hikvision takes cybersecurity very seriously as a company and complies with all applicable laws and regulations in the markets we operate," said the spokesman.
The US Department of Commerce has not responded to a request for comment outside of normal business hours.
Hikvision manufactures surveillance cameras and security products using artificial intelligence. The company says its products track people using facial recognition or physical features such as gait, count the number of people visiting specific areas, and detect "unusual behavior as a violent action."
Hikvision has faced international criticism for its monitoring agreements in Tibet and Xinjiang. US lawmakers last year called for sanctions against the company and accused it of helping China create a "high-tech police state."
The brokerage firm Jefferies said in a note on Wednesday that a US ban would not affect Hikvision as hard as Huawei. The company can purchase critical parts for its artificial intelligence products from local distributors, said Rex Wu, an analyst at Jefferies.
In a note last month, Wu said that he expected that "the Chinese central government supply platform will increase the annual Hikvision business figure," pointing out that "Xinjiang's public security budget for 2019 is still rising" compared to the previous year.
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