Ali Hasan
Xiaomi and various other Chinese companies have been blacklisted by the US for alleged having military links. The Department of Defense added 9 other companies to its list of Chinese companies with military links, including Xiaomi and state-owned plane manufacturer Commercial Aircraft Corp. of China (Comac).
Xiaomi Corp. plunged a record 10% after the Trump administration blacklisted China’s No. 2 smartphone maker and other companies, broadening efforts to undercut the expansion of the country’s technology sector.
The U.S. has targeted scores of Chinese companies for the stated purpose of protecting national security, but going after Xiaomi was unexpected. The Beijing-based company has been viewed as China’s answer to Apple Inc., producing sleek smartphones that draw loyal fans with each new release.
Other firms targeted include Luokong Technology Corp., Gowin Semiconductor Corp., Global Tone Communication Technology Co. and Advanced Micro-Fabrication Equipment Inc. Index stalwarts such as China’s three biggest telecom firms are already on the list.
Xiaomi said in a statement it is not owned or controlled by the Chinese military, adding that it would take appropriate actions to protect its interests.
The move sent Xiaomi suppliers south on Friday: FIH Mobile Ltd., which helps it assemble smartphones, plunged almost 14% after a strong rally in recent days. Component suppliers including Largan Precision Co., Sunny Optical Technology Group Co. and AAC Technologies Holdings Inc. also fell. Spreads on Xiaomi’s dollar bonds widened as much as 60 basis points Friday, according to credit traders.
Separately, the U.S. Commerce Dept. blacklisted China’s No. 3 oil company, China National Offshore Oil Corp., and Skyrizon, which develops military equipment. The Commerce designation is more severe and prohibits American firms from supplying those entities.
CNOOC has been involved in offshore drilling in the disputed waters of South China Sea, where Beijing has overlapping territorial claims with other countries including Vietnam, the Philippines, Brunei, Taiwan, and Malaysia.
“China’s reckless and belligerent actions in the South China Sea and its aggressive push to acquire sensitive intellectual property and technology for its militarisation efforts are a threat to U.S. national security and the security of the international community,” U.S. Commerce Secretary Wilbur Ross said in a statement.
“CNOOC acts as a bully for the Peoples Liberation Army to intimidate China’s neighbours, and the Chinese military continues to benefit from government civil-military fusion policies for malign purposes,” Mr. Ross said.
This moves will further fuel the US-China trade war as just a few weeks back 3 Chinese telecom companies were delisted from the New York Stock Exchange.
