Xiaomi US investment restriction has been blocked

JC Torres - Mar 14, 2021, 9:03pm CDT
Xiaomi US investment restriction has been blocked

Although companies like Huawei and ZTE have long been the target of the US government’s intense scrutiny, Xiaomi wasn’t about to get away without some scuff marks. Just before former US President Donald Trump’s term ended, his government made one final move that almost put the Chinese smartphone and IoT giant in the same hot waters, although to a lesser extent. Now the order that would have prevented US entities from investing in Xiaomi was just blocked by a US federal judge that called into doubt the company’s alleged ties to the Chinese military.

Different US government agencies place restrictions on different Chinese companies for different reasons. ZTE got into trouble for repeatedly violating trade embargoes, Huawei has been accused of spying on behalf of the Chinese government, and DJI’s drones have allegedly been involved in human rights abuses in China. Early this year, the Department of Defense put Xiaomi on a slightly different list, one that labeled it as a Chinese Communist Military Company or CCMC.

Compared to the fate that Huawei suffered, Xiaomi’s “punishment” almost seemed like a slap on the wrist. It wouldn’t be prevented from getting access to US products and resources but US companies and entities are not allowed to invest in the company. Xiaomi filed for a preliminary injunction to block the order, citing that it would suffer extreme and irreversible damage from such an allegation.

US District Court Judge Rudolph Contreras agreed and blocked the DoD order. Additionally, he called into question the arbitrary and capricious labeling of the civilian company as a CCMC, doubting that national security was actually threatened in this particular case. Despite being internationally famed for its smartphones, Xiaomi’s mobile devices have no official presence in the US.

It isn’t clear how far the DoD will take the legal battle to keep Xiaomi on its list. Biden’s pick for the Commerce Department indicated that there will be no changes to Huawei’s status, at least for now, but Xiaomi’s case, for better or worse, lies with a different office.

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