Chinese mobile phone leader Xiaomi removed from Pentagon blacklist

The U.S. Department of Defense will remove Xiaomi Corp. from a blacklist of Chinese companies prohibited from receiving American investment, according to a court filing on May 12, 2021.

Xiaomi — an upstart mobile phone company that has an Apple-like fan base in China and now plans to make electric cars — was placed on a U.S. government blacklist for reported ties to the Chinese military in the waning days of the Trump administration.

• In an executive order that took effect in January 2021, Trump wrote, “The People’s Republic of China is increasingly exploiting the United States capital to resource and to enable the development and modernization of its military.”
• Video surveillance company Hikvision, aircraft maker COMAC, and China’s largest semiconductor chipmaker, SMIC, were also blacklisted alongside Xiaomi. There is no word of relief for those companies.

But the ban never made much sense from a national security point of view.

• Xiaomi filed a lawsuit against the U.S. government shortly after being blacklisted, and denied any ties to the Chinese military.
• In March, a U.S. federal judge criticized the ban on Xiaomi and issued a court order to prevent Xiaomi’s addition to the Pentagon blacklist, citing the U.S. government’s “deeply flawed” process for blacklisting the company.
• The Biden administration will not challenge that ruling, reports Reuters.
• Xiaomi and the Department of Defense will “negotiate over the specific terms of the order” and agree upon a “joint proposed order” by May 20, 2021.

Xiaomi’s shares rebounded by 6% on the Hong Kong Stock Exchange Wednesday afternoon, following reports of the company’s blacklist removal. In January, share prices had decreased by 20%.

• Last year, Xiaomi surpassed Apple to become the world’s third-biggest smartphone brand after Samsung and Huawei.