U.S. Adds Chinese Smartphone Giant Xiaomi to Blacklist

Just five days before the official inauguration of President Joe Biden, the Trump administration is making a late push to ban more Chinese companies deemed risky, including smartphone maker Xiaomi and state-owned oil firm CNOOC.

Xiaomi was one of nine firms added to the Defense Department’s list of banned firms linked to the Chinese military, expanding the original list of over 60 companies.

The Department is determined to highlight and counter the People’s Republic of China’s (PRC) Military-Civil Fusion development strategy, which supports the modernization goals of the People’s Liberation Army (PLA), said a statement from the Department of Defense (DoD).

According to the DoD, PLA modernization is being ensured via access to «advanced technologies and expertise acquired and developed by even those PRC companies, universities, and research programs that appear to be civilian entities».

Financial firms that wish to comply with sanctions on the additional firms will have to rebalance their exposure and many have reportedly done so in recent times, delisting of structured products in Hong Kong or removing constituents from major global index compilers.

One notable global firm that has bucked the trend by maintaining business ties without complying to U.S. sanctions is State Street Global Advisors, whose Asia unit reversed its decision to remove banned stocks from the renowned Tracker Fund following pressure from Hong Kong officials.

In the third quarter of last year, the Chinese tech giant surpassed Apple in terms of smartphone sales and entered Hong Kong’s benchmark Hang Seng Index in September. Its current market capitalization exceeds $700 billion.