The U.S Defense Department removes China`s Xiaomi Corp from a government blacklist, a court filing showed, marking a reversal by the Biden administration of one of Donald Trump`s last orders at Beijing before exiting office.
Relief for Xiaomi
The court filing said the company and the U.S. government would agree to resolve their ongoing litigation, bringing to an end a brief and controversial spat between the hardware company and Washington that had further soured Sino-U.S. ties.
Emily Horne, a spokeswoman for the White House National Security Council, said “the Biden Administration is deeply concerned about potential U.S. investments in companies linked the Chinese military and fully committed to keeping up pressure on such companies.”
“Defendants have agreed that a final order vacating the January 14, 2021 designation of Xiaomi Corporation as a CCMC…would be appropriate,” states the joint status report filed Tuesday with the US District Court for the District of Columbia in Xiaomi v. US Department of Defense. A CCMC is a “Communist Chinese military company,” according to the Defense Department.
The department had designated the firm as having ties to China`s military and placed it on a list that would restrict U.S. investment in the company. Seven other Chinese companies were also placed under similar restrictions.
Xiaomi challenged the ban
Xiaomi went on the offensive by filing a lawsuit against the U.S. government, calling its placement “unlawful and unconstitutional” and denying any ties to China`s military.
A federal judge temporarily blocked enforcement of the blacklisting, in March, citing the U.S. government’s “deeply flawed” process for including it in the ban. The judge last week also suspended an investment ban imposed on Luokung Technology Corp, the Chinese mapping technology company.
Biden administration has agreed not to challenge that ruling. Horne cited the ruling saying “the Trump Administration failed to develop a legally sufficient basis for imposing restrictions on the company and compelled this action.”
Xiaomi`s local smartphone rival Huawei Technologies Co Ltd was also put on an export blacklist in 2019 and barred from accessing critical technology of U.S. origin, affecting its ability to design its own chips and source components from outside vendors. The measures effectively crippled the company`s smartphone division.
Later, the U.S. Department of Defense placed similar restrictions on China`s Semiconductor Manufacturing International Corporation, a firm key to China`s national drive to boost its domestic chip sector.
Professor Doug Fuller, who tracks China`s semiconductor sector at the City University of Hong Kong, says that Xiaomi`s win was “low-hanging fruit” for the Biden administration in its efforts to correct the excesses of Trump`s China policy as his term ended.