The outgoing Trump administration is using its final days to further escalate tensions with Beijing as it blacklists more Chinese firms, including one of the biggest global smartphone makers, Xiaomi, and oil giant CNOOC.
The Department of Defense expanded the list of Chinese companies with alleged military ties once again on Thursday. Xiaomi, the Commercial Aircraft Corp of China (COMAC), as well as seven other entities, have been deemed “Communist Chinese military companies.” The move means that US investors will have to divest their stakes in the affected firms in accordance with an executive order signed by US President Donald Trump in November.
Xiaomi recently beat its American rival Apple in global smartphones sales to become the world’s third-largest smartphone maker. The company denies any links to the Chinese military, insisting it only manufactures products for civilian and commercial use. Xiaomi also pledged to protect the interests of its shareholders as its stock fell around 10 percent on the news of the investment ban.
While oil major China National Offshore Oil Corp (CNOOC) was already placed under the investment ban, it was also added to the infamous Entity List on Thursday. The Commerce Department said that CNOOC was added to the economic blacklist for “helping China intimidate neighbors in the South China Sea.” The same order targeted state-owned Skyrizon, which the US agency says could make military items such as aircraft engines for its push “to acquire and indigenize foreign military technologies.”
The blacklist includes Chinese tech giants Huawei and ZTE, as well as dozens of other companies. It forbids American businesses from dealing with blacklisted firms and transferring technology to them without special government permission. Despite the ban, Xiaomi has not been put on the Entity List. So, unlike Huawei, in theory it can acquire vital components like semiconductors, but it is unclear at this point how the military designation could further affect it.
Beijing has repeatedly warned Washington that it will protect the interests of its businesses. Earlier this month, it accused the US of abusing national security and state power “to suppress Chinese firms.” It also warned that these policies, which violate market rules, could backfire on foreign investors and could seriously undermine confidence in US capital markets.
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