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Chinese company looks to the courts to overturn bans

by on17 March 2021


Xiaomi proved they might be illegal


Chinese companies targeted by a sweeping investment ban imposed by former President Donald Trump are considering suing the US government after a federal judge on Friday suspended a similar blacklisting for Xiaomi.

Apparently, the firms have been on the blower to top law firms including Steptoe & Johnson and Hogan Lovells and have been emboldened by U.S. District Judge Rudolph Contreras’ preliminary order halting Xiaomi’s inclusion on a US list of alleged Communist Chinese military companies that are subject to an investment ban.

“The facts that led to Xiaomi’s designation are almost laughable, and I think it absolutely is going to lead to additional companies seeking relief”, said Washington lawyer Brian Egan, a former legal adviser in both the White House and State Department who also works at Steptoe.

The Trump administration’s move to blacklist Xiaomi which knocked $10 billion off its market share and sent its shares down 9.5 percent in January, would have forced investors to completely divest their stakes in the company.

Contreras said the US government process was “deeply flawed” and based on just two key criteria: its development of 5G technology and artificial intelligence, which the Defence Department alleges are “essential to modern military operations”. The other reason was an award given to Xiaomi founder and Chief Executive Lei Jun from an organisation said to help the Chinese government eliminate barriers between commercial and military sectors.

The judge noted that 5G and AI technologies were fast becoming standard in consumer electronics and that over 500 entrepreneurs had received the same award as Lei since 2004, including the leaders of an infant formula company.

Xiaomi and 43 other companies were added in the waning months of the Trump administration to the blacklist, which was mandated by a 1999 law requiring the Defence Department to publish a compilation of companies “owned or controlled” by the Chinese military.

Last modified on 17 March 2021
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