China tech giant Xiaomi has reportedly been granted a temporary reprieve in an ongoing case seeking to enforce an investment ban.
The proposed ban was put forward by the US government, due to the company’s CEO receiving an Outstanding Builder of Socialism with Chinese Characteristics award from China’s Ministry of Industry and Information Technology (MIIT) in 2019. The government was seeking to add the company to a blacklist for companies with ties to the Chinese military.
In effect, the ban would have forced American investors to divest their holdings with the company. Xiaomi, in suing to halt the ban, indicates that such a ban would do irreparable damage. Now, U.S. District Judge Rudolph Contreras has apparently agreed, blocking the investment ban. According to Judge Contreras, the US government has not substantively made a compelling case to prove Xiaomi as a national security risk.
Xiaomi wants to take the investment ban ruling a step further
Now, as noted above, this is a temporary reprieve. The investment ban could still go into effect if the US government can make its case against Xiaomi. US District Judge Contreras has gone so far as to conclude that the company will most likely be granted permanent relief. But that could change in the future.
In the interim, Xiaomi is now asking the federal court to go a step further. Specifically, it wants the court to declare its designation as a “Chinese military company” unlawful. And further to permanently remove it.
This could have been much worse for Xiaomi
Xiaomi, in facing down the US government on both its designation and the ban, may have prevented a much worse fate for itself. While the company doesn’t necessarily sell its phones in the US, this ban could have removed far more than investments. For instance, it could ultimately have been de-listed from US exchanges. And that could have the potential of pushing it toward an end similar to Huawei’s.