The ongoing Xiaomi / US saga is escalating rapidly. If you haven’t followed it closely, one of the Trump administration’s swansongs was to designate Xiaomi as a “Chinese Communist Military Company”. A title which would qualify him to fall under the decree of the administration of November which prohibits the American companies of securities and investments to put capital in these companies.
What the listing currently implies in more practical terms is that if the decision is made, all US institutional investors in Xiaomi would be forced to withdraw their stakes in the company by November. Some of the more notable U.S. investors expected to comply include Qualcomm Inc., BlackRock Inc., Vanguard Group Inc., and State Street Corp.
Xiaomi Corp has now taken legal action against the US Department of Defense and Treasury, challenging the blacklist in the US District Court of Columbia, while naming Secretary of Defense Lloyd Austin and Secretary of the Treasury Janet Yellen as defendants. Xiaomi representatives called the blacklist “unconstitutional” and noted in the court file that:
Xiaomi faces imminent, serious and irreparable harm if the designation remains in place and the restrictions take effect …
Huawei Technologies Co. and most of its subsidiaries are also on the same blacklist, along with Chinese chipmaking giant Semiconductor Manufacturing International Co. and drone maker SZ DJI Technology Co., to name a few. some.
With the new U.S. administration Biden officially in place and actively plowing various laws left by their predecessors with an avalanche of executive orders, it’s theoretically possible to see a relatively soft resolution to this situation. However, for now, Xiaomi’s lawsuits are a sharp rise in the lingering economic and political tensions between the United States, China, and various business entities.
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