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Xiaomi designated as a ‘Communist Chinese military company’ by US govt

Smartphone maker Xiaomi has been branded as a ‘Communist Chinese military company’ by the US’s Department of Defense. This means that American businesses could potentially be prohibited from investing in Xiaomi, and they might be forced to divest from Xiaomi on November 11, 2021, as per an executive order signed by Donald Trump in November last year, which was amended on Thursday.

Previous companies that have been added to it include Huawei, Hikvision, and Semiconductor Manufacturing International Corporation, among others. Apart from technology companies, the list also includes companies from the infrastructure, aviation, chemicals, and aerospace sector.

“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) by ensuring its access to advanced technologies and expertise acquired and developed by even those PRC companies, universities, and research programs that appear to be civilian entities,” the Defense Department said in a statement.

In response to being added to the list, a Xiaomi spokesperson sent the following statement to MediaNama:

“The Company has been in compliance with law and operating in compliance with the relevant laws and regulations of jurisdictions where it conducts its businesses. The Company reiterates that it provides products and services for civilian and commercial use. The Company confirms that it is not owned, controlled or affiliated with the Chinese military, and is not a “Communist Chinese Military Company” defined under the NDAA. The Company will take appropriate course of actions to protect the interests of the Company and its shareholders.

The Company is reviewing the potential consequences of this to develop a fuller understanding of its impact on the Group. The Company will make further announcements as and when appropriate.”

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What Trump’s November 2020 EO said: In the November 2020 executive order which the outgoing president had signed, he had said that “through the national strategy of Military-Civil Fusion, the PRC increases the size of the country’s military-industrial complex by compelling civilian Chinese companies to support its military and intelligence activities”. He added that these companies “directly support” China’s “military, intelligence, and security apparatuses”.

Earlier this month, the Trump administration had banned eight China-based apps — Alipay, CamScanner, QQ Wallet, SHAREit, Tencent QQ, VMate, WeChat Pay, and WPS Office — citing national security concerns.

Meanwhile, the US’s Commerce Department is trying to block entire countries from investing in the US’ ICT sector, after identifying them as “foreign adversaries”. The countries include China, Russia, Iran, North Korea, Cuba, and the government of Venezuela’s Nicolás Maduro.

Updated on January 19 with statement from Xiaomi spokesperson. Originally published on January 15.

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