(Reuters) -McKinsey has instructed its mainland China business to steer clear of projects deploying generative artificial intelligence, the Financial Times reported on Wednesday, citing two people with knowledge of the matter.
The move was prompted by the US governments increasing scrutiny of US companies operating in sensitive sectors such as AI and quantum computing in China, the newspaper said.
The ban extends to projects in the offices of multinational clients, but does not stop McKinsey’s China business from working with companies that have more established types of AI in their products, the report added.
Last year, McKinsey further strengthened its client service policies in China, with work focusing on multinational and Chinese private sector firms, a McKinsey spokesperson said in an emailed statement.
“We follow the most rigorous client selection policy in our profession, and we continue to evolve and strengthen our approach,” the spokesperson added.
The company employs over 1000 individuals in China, across six regions, according to its website.
The report comes at a time of increasing tension between Washington and Beijing, where China has imposed exit bans on some US citizens visiting the nation.
Last year, US lawmakers demanded a probe into the McKinsey’s failure to disclose its work with China’s government.
(Reporting by Gnaneshwar Rajan and Bipasha Dey in Bengaluru; Editing by Mrigank Dhaniwala and Nivedita Bhattacharjee)