U.S. Adds Chinese Smartphone Giant Xiaomi to Blacklist
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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.
Questions & Answers
Q.What is the primary reason the U.S. Defense Department added Xiaomi to its blacklist?
What is the primary reason the U.S. Defense Department added Xiaomi to its blacklist?
The Department of Defense added Xiaomi to its blacklist because it believes the company is linked to the Chinese military. This action is part of efforts to counter China's Military-Civil Fusion development strategy.
Q.How has the addition of these companies to the blacklist affected financial firms?
How has the addition of these companies to the blacklist affected financial firms?
Financial firms looking to comply with the sanctions have reportedly rebalanced their exposure. This includes delisting structured products in Hong Kong and removing constituents from major global index compilers.
Q.Which firm has not complied with the U.S. Sanctions regarding banned Chinese companies?
Which firm has not complied with the U.S. Sanctions regarding banned Chinese companies?
State Street Global Advisors, specifically its Asia unit, has not complied with the U.S. Sanctions. It reversed its decision to remove banned stocks from the Tracker Fund after pressure from Hong Kong officials.
Q.How does Xiaomi's recent performance compare to other smartphone manufacturers?
How does Xiaomi's recent performance compare to other smartphone manufacturers?
Xiaomi surpassed Apple in smartphone sales during the third quarter of last year. The company also joined Hong Kong’s benchmark Hang Seng Index in September, and its market capitalisation now exceeds $700 billion.
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