Banned Chinese companies look to US courts after Xiaomi win: Report

A US courtroom halted Chinese telephone maker Xiaomi’s inclusion on a listing of companies topic to an funding ban imposed throughout former President Trump’s time period.

Chinese corporations affected by a sweeping funding ban imposed by former US President Donald Trump are reportedly contemplating suing the US authorities after a federal decide suspended an identical blacklisting for Beijing-based smartphone maker Xiaomi.

Lawyers conversant in the matter informed the Reuters information company that among the banned Chinese corporations are in talks with regulation companies, together with Steptoe & Johnson and Hogan Lovells, emboldened by US District Judge Rudolph Contreras’ preliminary order on Friday halting Xiaomi’s inclusion on a US checklist of alleged Communist Chinese army corporations which might be topic to an funding ban.

The Trump administration’s move to blacklist Xiaomi Corp, which knocked $10bn off its market worth and despatched its shares down 9.5 % in January, would have compelled traders to fully divest their stakes within the firm.

“Companies are reaching out to lawyers to challenge the listings and the grounds for the listings,” mentioned Wendy Wysong, managing accomplice of the Hong Kong workplace of Steptoe & Johnson, a worldwide regulation agency headquartered in Washington, DC. Wysong and an individual conversant in Hogan Lovells, one other international regulation agency, declined to call the businesses concerned in discussions.

Contreras flagged the US authorities’s “deeply flawed” course of for together with the corporate within the funding ban, based mostly on two key standards: its improvement of 5G cellular community expertise and synthetic intelligence.

The Department of Defense alleges these applied sciences are “essential to modern military operations”.

367268812A Xiaomi Corp Mi 5G smartphone [File: Angel Garcia/Bloomberg]

The decide famous that 5G and AI applied sciences have been quick changing into commonplace in client electronics.

“The facts that led to Xiaomi’s designation are almost laughable, and I think it absolutely is going to lead to additional companies seeking relief,” mentioned Washington lawyer Brian Egan, a former authorized adviser in each the White House and Department of State who additionally works at Steptoe.

Government undecided

In a joint submitting on Tuesday, the US authorities mentioned it had not selected the “appropriate path forward” within the Xiaomi case in gentle of the decide’s determination.

A spokeswoman for the US Department of Justice, which is defending the case, declined to remark. A spokeswoman for the Department of Defense referred inquiries to the White House, which has not responded.

Xiaomi and 43 different corporations have been added within the waning months of the Trump administration to the blacklist, which was mandated by a 1999 regulation requiring the Department of Defense to publish a compilation of corporations “owned or controlled” by the Chinese army.

Seeking to cement a tricky line on China and field his Democratic successor, Joe Biden, into hardline insurance policies, Trump signed an government order that was later expanded to bar all US traders from holding securities within the named corporations starting on November 11, 2021.

Other corporations listed embrace video surveillance large Hikvision, China National Offshore Oil Corp (CNOOC) and China’s high chipmaker, Semiconductor Manufacturing International Corp (SMIC).

SMIC, Hikvision and CNOOC didn’t instantly reply to requests for remark.

Luokung Technology Corp, a mapping expertise firm on the checklist, additionally sued the US authorities earlier this month and is anticipated to hunt preliminary aid much like that awarded to Xiaomi.

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