Xiaomi Corporation files legal complaint against the U.S. ban

Ruben Fields
February 2, 2021

Xiaomi has filed a legal action against the US Defense and Treasury departments that seeks to remove itself from the country's official list of Communist Chinese military companies (CCMC).

The Defense Department, under the Trump administration in mid-January, added Xiaomi and eight other companies to a blacklist, claiming they had ties with the Chinese military, which requires American investors to divest their holdings in the firms by a set deadline.

As a result, people in the United States will no longer be able to purchase publicly traded Xiaomi securities or derivatives of those securities from March 15 onwards and must divest any holdings by January 14 next year. Xiaomi in its defence said that the blacklisting was "unconstitutional", as per a report by Bloomberg.

Besides Xiaomi, other Chinese tech companies such as semiconductor manufacturer SMI, Huawei or drone company DJI have also been included in the list that also prohibits U.S. companies from selling tech items to them without government approval.

The U.S Department of Defense and the Treasury Department have not issued any response to the lawsuit yet.

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The move to designation Xiaomi as a "Communist Chinese military company" came amid heightened trade tensions between China and the U.S. under the Trump administration.

In their lawsuit, Xiaomi's lawyers state that the company will suffer immediate, serious and permanent damage if the listing remains in force and the resulting measures take effect.

In any case, Xiaomi has been pointing out that the company is not affiliated or co-owned by any individual or group that has links with the Chinese military.

The tensions between the USA and China don't look like they are dying down anytime soon, and in the process, several Chinese tech companies like Huawei, ZTE, and Xiaomi are finding themselves caught in the crossfire.

Huawei Technologies Co. and most of its subsidiaries are also on the same blacklist, as well as Chinese chipmaking giant Semiconductor Manufacturing International Co. and drone maker SZ DJI Technology Co. The aim is to have the investment ban imposed by the last government lifted.

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