In his waning days, Donald Trump’s administration has dealt another blow to China as it blacklisted the Chinese smartphone maker Xiaomi and eight other Chinese firms on Thursday. The move bars United States investors and companies from investing capital into blacklisted companies. Hong-Kong listed Xiaomi’s shares fell almost 11% in reaction to the US blacklisting.
While the United States has opposed China’s territorial claims in the South-China sea and has accused China of intimidating local Asian counties like Vietnam and the Philippines, China has charged Washington of trying to destabilize the region by sending planes and warships.
In an attempt to impose sanctions on Chinese officials and companies for alleged misdeeds, Outgoing US President Donald Trump had passed an executive order in November 2020 which restricted US investors from buying shares and related securities of companies included in the Department of Defense’s list of companies with close ties to the Communist Chinese military company.
The executive order mentioned that China exploits American investors to finance the modernization and development of its military by selling shares and securities of companies that trade both in the US as well as China. US investors have to comply with the executive order by 11th November 2021.
The Department had released its initial list of blacklisted companies in June 2020 and in July 2020 it included Chinese telecom companies Huawei and ZTE on grounds of threat to America’s national security. Xiaomi along with eight other Chinese companies have now been added to the list which includes more industrially oriented companies engaged in aviation, aerospace, shipbuilding, telecom, construction, and other forms of infrastructure. The list also included plane-maker Carmac. In its statement on Thursday, the department stated that:
In responses, the Chines embassy alleged the United States of “pinning political and ideological labels on economic and trade issues and exploiting its state power to crack down on foreign companies, under the pretext of national security”. As per reports, Xiaomi had replaced Apple as the world’s third-largest smartphone maker by sales in the third quarter of 2020.
While the move has further added to the ongoing US-China tensions; however, it is expected that the order may be overturned with the Biden Administration taking over in less than a week. Whether the new administration will bring any relief to the ongoing US-China tensions is something to watch out for!
