Ukrainians walk into a Xiaomi store in Kiev wearing masks. (Oct. 22, 2020)
China’s Xiaomi Technology Co. and the U.S. Department of Defense reached an agreement in which the latter agreed to take Xiaomi off a government blacklist.
A court filing said the two sides will agree to settle ongoing litigation with no further disputes, Reuters reported Wednesday (May 12).
Bloomberg reported that the U.S. Department of Defense has now agreed that a final order vacating the determination “would be appropriate,” according to a document filed in U.S. court on Tuesday (May 11).
Analysts believe the filing indicates that the short-lived and controversial lawsuit between Xiaomi and the U.S. government will come to an end and will clear the way for U.S. investors to invest in the Chinese smartphone maker in the future.
On Jan. 14, the U.S. Department of Defense designated Xiaomi and nine other Chinese companies as companies with ties to the Communist Party’s military and placed them on a list of companies restricted from investing in the United States under an executive order issued by then-President Donald Trump. The ban on investment in Xiaomi was scheduled to take effect on March 15, 2021, 60 days after the company was designated as a foreign military-affiliated company, according to the regulations.
Xiaomi immediately filed a lawsuit against the U.S. government, calling it “illegal and unconstitutional” and denying any ties to the Chinese military.
After the new Biden administration took office, a federal judge temporarily blocked enforcement of the blacklist in March, citing “serious flaws” in the U.S. government’s process for incorporating the blacklist into the ban.
Reuters reported that after news broke that Xiaomi had been blacklisted by the U.S. Department of Defense, a Xiaomi spokesman said the company was closely monitoring the latest developments, but did not elaborate further. As news of the decision spread, Xiaomi’s share price in Hong Kong soared more than 6 percent.
Xiaomi Technology Co. was founded on March 3, 2010, and is headquartered in Beijing. In addition to producing smartphones, Xiaomi’s products include wearable devices such as robotic vacuum cleaners, electric bicycles and bracelet watches. Xiaomi went public in Hong Kong in 2018.
Analysts believe this agreement between Xiaomi and the U.S. Department of Defense is rare amid continuing apparent disagreements between the U.S. and China on a range of issues, from trade to human rights. Analysts also noted that while the U.S. took Xiaomi off the blacklist, that doesn’t mean the Biden administration will reverse all of the previous administration’s bans on Chinese technology companies. This week, the Biden administration extended a 2019 executive order banning U.S. companies from using telecom equipment made by companies like Huawei, accusing the devices of posing a national security risk. Meanwhile, the U.S. Congress is stepping up a bipartisan legislative push to counter the Chinese Communist Party and enhance U.S. competitiveness in technology and key manufacturing areas.
Chinese Communist Party Foreign Ministry spokeswoman Hua Chunying said at a regular press conference in Beijing on Wednesday that she was unaware of any agreement Xiaomi may have reached with the United States. But she said she hoped the U.S. would correct the mistakes of the previous administration and provide a fair and equitable and non-discriminatory business environment for Chinese companies to do business normally.
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