Chinese smartphone maker Xiaomi’s chairman Lei Jun
A federal judge on Friday (March 12) temporarily barred the U.S. Department of Defense from forcing U.S. investors to withdraw their holdings in the Chinese smartphone maker, citing Xiaomi’s ties to the Communist Party’s military.
The ban came in mid-January after the Trump administration added Xiaomi and eight other Chinese companies to a list of investment bans that required U.S. investors to sell their holdings in Xiaomi by a deadline. The restriction is scheduled to take effect next week.
In late January, Xiaomi filed a lawsuit in federal court in Washington, D.C., seeking to be removed from the list, saying the Defense Department’s approach is “illegal and unconstitutional” while claiming it is not controlled by the Communist Party’s military.
Judge Rudolph Contreras of the federal court in Washington, D.C., said Friday that the court “concluded that the defendant (the U.S. Department of Defense) gave no reason for (Xiaomi) to endanger national security interests.”
In a statement, a Xiaomi spokesman welcomed the court’s decision and said the designation of Xiaomi as a Communist Party military company was “arbitrary and capricious.”
The spokesman said, “Xiaomi plans to continue to ask the court to declare the decision made against it illegal and to permanently remove the decision.”
The Defense Ministry has designated Xiaomi as a Chinese company with a Communist military background or controlled by the Communist military. Xiaomi, for its part, has been arguing that it has no ties to the CCP military and has filed a lawsuit in the District Court for the District of Columbia against the U.S. Department of Defense and the Treasury Department, arguing that they committed procedural unfairness and factual errors in their decision to place Xiaomi on the sanctions list. Xiaomi wants the court to declare that the DOD and Treasury Department’s decision was wrong and ask them to withdraw their decision.
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