The US government has decided not to blacklist Xiaomi after all, completely reversing its previous decision. This change comes after a lawsuit Xiaomi filed against the government over its intention to blacklist it.
Xiaomi Is No Longer Being Blacklisted
Undoing previous President Donald Trump's decision, the US government has agreed not to place Xiaomi on a military blacklist. This decision was reached after Xiaomi filed a lawsuit against the US government to fight the blacklisting.
Xiaomi first engaged in the lawsuit against the US government earlier in 2021, denying it had ties to the Chinese military. In March, a federal judge ruled in Xiaomi's favor to block the blacklist position, and that ruling is being enacted now.
The Department of Defense (DoD) agreed to a "final order vacating" for Xiaomi's pending position on the blacklist, according to a court filing. By May 20th, all the details must be worked out and agreed upon. From the filing, it seems that the US government is not going to pursue the matter any further.
Without this reversal, Xiaomi's position on the military blacklist would have been enforced on November 11th. At that time, investors would have been required to liquidate any holdings in the company, and no further investments could be made.
Why Was Xiaomi Going to Be Blacklisted?
In January, the US government (under the previous President, Donald Trump) announced that nine Chinese companies, including Xiaomi, would be placed on a military blacklist. This decision was made following allegations that Xiaomi, and the other nine companies, were "Communist Chinese Military companies".
Although Huawei was previously added to the same list, Xiaomi was not blocked from making sales in the US. Rather, the list focused on investments in the company. This is because a law passed in November 2020 prohibits Americans investing in companies that are placed on the Department of Defense's list.
Regardless, the decision would have put Xiaomi in a rather dire situation, as the company receives a large amount of investment from the US. Luckily for Xiaomi, it can now continue to receive investments from the US like normal. Since Xiaomi is the third-largest smartphone manufacturer, investment is a large component of its business.
Is Xiaomi Just the First Company to Fight Back?
Xiaomi is the first company to get the US government to reverse its decision on a blacklist position. Following Xiaomi's success, it seems likely that other companies will follow suit with similar lawsuits. Perhaps the companies won't need to do so, as the US government will reverse the decision on them as well now that Donald Trump it out of office.
The decision made by the US government is sparking another dramatic change with regard to relations with Chinese companies, and fortunately it's a step in the right direction.