Xiaomi Among Nine More Firms US Adds to Chinese Military Blacklist

In a final push to increase the pressure on Beijing before President-elect Joe Biden takes office, the Trump administration on Thursday added nine Chinese firms to government blacklists of companies that it says have ties to the Chinese military, including Chinese oil giant China National Offshore Oil Corporation (CNOOC) and smartphone manufacturer Xiaomi.

Firms added to the U.S. Department of Defense’s military blacklist include state-owned plane maker Commercial Aircraft Corporation of China (COMAC) and China National Aviation Holding, the parent company of Air China.

Following an executive order signed by President Donald Trump in November, the companies will be subject to an investment ban that forces American investors to divest their holdings of the blacklisted firms by Nov. 11.

The commerce department placed CNOOC, China’s third-largest oil company, onto an entity list, meaning American businesses are barred from exporting products or technology to the company without a license. U.S. Commerce Secretary Wilbur Ross said the oil giant “acted as a bully” and helped the Chinese military intimidate neighbors in the South China Sea.

Other Chinese companies placed on the entity list include telecoms giant Huawei, chipmaker Semiconductor Manufacturing International Corporation (SMIC) and drone maker DJI.

Beijing-based Xiaomi surpassed Apple in smartphone sales in the third quarter of 2020, making it the world’s third-largest smartphone maker. The company’s Hong Kong-listed shares were down 10.6% at the open on Friday following the news.

A Xiaomi spokesperson told Pandaily in a statement that the company “is not owned, controlled or affiliated with the Chinese military, and is not a ‘Communist Chinese Military Company’ defined under the The National Defense Authorization Act (NDAA).”

Xiaomi said it provides products and services for civilian and commercial use, and has been in compliance with the relevant laws and regulations of jurisdictions where it conducts its businesses, the statement said.

The company is in the process of reviewing potential consequences of the move to assess impact, adding that it will “take appropriate course of actions to protect the interests of the company and stakeholders.”

U.S. defense and state officials also deliberated but ultimately decided against banning investment in China’s tech giants Alibaba, Tencent and Baidu after Treasury Secretary Steven Mnuchin pushed back the plans.

China’s Foreign Ministry spokesperson Zhao Lijian said in a press briefing on Thursday that “the Chinese government … stands against politicizing economic and trade issues and abusing state power and the concept of national security to oppress foreign companies.”

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“The U.S. should respect the principles of the market economy and fair competition, abide by international economic and trade rules, and provide an open, fair, just and non-discriminatory business environment for foreign companies operating in the United States, including Chinese ones,” he added.