Xiaomi reels as US ramps up China blacklist

HONG KONG: Shares in Xiaomi collapsed yesterday after the United States blacklisted the smartphone giant and a host of other Chinese firms as the Trump administration aims to cement its trade war legacy against Beijing.

Beijing hit back at the latest sanctions, accusing the US of ‘abusing state power’ to crack down on Chinese companies ‘for no reason’.

The flurry of last-minute blacklistings is the coda to four years of aggressive diplomatic and trade policies towards rival China under Donald Trump.

With just six days to go before the president leaves office, US officials made a series of announcements targeting Chinese firms including state oil giant CNOOC, Xiaomi and embattled social media favourite TikTok.

Xiaomi – which overtook Apple last year to become the world’s third-largest smartphone manufacturer – was one of nine firms classified by the Pentagon as ‘Communist Chinese military companies’.

The Pentagon’s action means US investors will be unable to purchase Xiaomi securities and will ultimately have to divest down the line unless the order is overturned by the incoming administration of Joe Biden.

Xiaomi is one of the biggest companies to be blacklisted so far and its shares plunged more than 10 per cent in Hong Kong by the close of trading yesterday after the announcement. US chip giant Qualcomm is a major investor.

The smartphone maker denied having links to China’s military and said in a statement it was ‘reviewing the potential consequences’ of the new order.

But the US Department of Defence said it was ‘determined to highlight and counter the People’s Republic of China’s military-civil fusion development strategy’ that allowed it to access key technology and security data.

Similar actions have been made by the US against other tech firms including Huawei and chip giant SMIC, hobbling their ability to import key technology and compete internationally.

“The Trump administration has broadened the concept of national security, abused state power and repeatedly cracked down on Chinese companies for no reason. China is firmly opposed to that,” said Chinese foreign ministry spokesman Zhao Lijian yesterday.

Trump issued an executive order in November banning Americans from investing in Chinese companies deemed to be supplying or supporting the country’s military and security apparatus, earning a sharp rebuke from Beijing.

Earlier this month the New York Stock Exchange said it was delisting three state-owned Chinese telecoms giants to comply with the order.

The Commerce Department also released a separate banned entity list on Thursday targeting companies such as CNOOC and deep-water explorer Skyrison, which develops military equipment.

That makes it extremely difficult for US firms to export products or technology to those companies without a hard-toobtain licence.

Commerce Secretary Wilbur Ross said CNOOC had been listed because of ‘reckless and belligerent actions in the South China Sea and its aggressive push to acquire sensitive intellectual property and technology for its militarisation efforts’.

“CNOOC acts a bully for the People’s Liberation Army to intimidate China’s neighbours, and the Chinese military continues to benefit from government civil-military fusion policies for malign purposes,” Ross said. — AFP