Xiaomi is no longer on the government’s blocklist, according to a new court filing spotted by Reuters. On its way out the door on January 14, the Trump administration’s Department of Defense declared Xiaomi a “Communist Chinese military company,” but now with Joe Biden in charge, Xiaomi and the US government are burying the hatchet. According to Reuters, “The filing stated that the two parties would agree to resolve their ongoing litigation without further contest.”
The DOD says the “Communist Chinese military company” list is meant to “highlight and counter the People’s Republic of China’s (PRC) Military-Civil Fusion development strategy,” which the US government says funnels technology to China’s army through “companies, universities, and research programs that appear to be civilian entities.” This list isn’t the all-out export ban that Huawei has been facing—that’s the US Department of Commerce’s “entity list.” The military company list just bans US investment in the company.
Xiaomi called the ban “unconstitutional” and said it was “factually incorrect and has deprived the company of legal due process.” The company added that the investment restrictions would cause “immediate and irreparable harm to Xiaomi.” The first of the restrictions would have kicked in on March 15, 2021, (a ban on buying new shares of Xiaomi), but that was temporarily blocked by a federal judge, who called the government’s ban process “deeply flawed.” Eventually, the ban would have forced US investors to divest themselves of Xiaomi shares, which would have been a big problem for the company. Xiaomi had an IPO in 2018, and today three of the top 10 shareholders are US citizens.
The Biden administration is walking back one of Trump’s anti-China decisions, but that doesn’t mean the US government is now sweet on China. Biden has tightened restrictions on Huawei’s suppliers, which further disrupted some of the few trade deals it was able to secure.