Xiaomi won't be blacklisted by the U.S. government after all

Thursday, 13 May, 2021 - 01:04

Near the end of former President Donald Trump's tenure, the U.S. Department of Defense added Xiaomi, along with eight other Chinese companies, to an investment blacklist, labeling the smart device maker as a Communist Chinese Military Company. The order prevented American investors from putting any money into Xiaomi, and also would have forced existing stakeholders to divest their shares in the company by November.

Now, the U.S. government is reversing its course, at least in regards to Xiaomi specifically, according to recent court filings seen by Bloomberg. In the documents, the Department of Defense says that it "would be appropriate" to revert the designation, though nothing was said on the conditions for that to happen. The two sides are still negotiating the terms and a separate joint proposal will be filed by May 20.

Shortly after the Department of Defense placed Xiaomi under an investment ban, the company filed an injunction against the U.S. government to prevent the order from going through, and the courts sided with the company, bringing the ban to a temporary halt. Judge Rudolph Contreras also believed that it was likely that Xiaomi would be able to see a full reversal of the ban.

Neither of the parties involved has offered any comment on the case as of yet, and a spokeswoman for the Chinese Foreign Ministry said that she had no knowledge of any settlement that Xiaomi may have reached with the U.S government. Still, Xiaomi shares jumped 6.7% following the filing.

The decision to reverse the ban may signal easing tensions between the United States and China, which could eventually be good news for other tech companies such as Huawei. The Chinese smartphone maker has been on the U.S. Entity List for a couple of years, which carries much heavier restrictions. This has prevented it from buying products from American companies and led to a downward spiral in its sales numbers. The company has been forced to sell its Honor sub-brand to a Chinese consortium, and reports have even suggested that its Mate and P brands could be up for sale, too. Huawei has invested heavily in its own ecosystem since then, but it's hard to deny the impact of not having Google services like the Play Store available, and so it's likely that Huawei would jump at the chance to include them in its phones again.

Source: Eurasia Diary