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Xiaomi wins temporary reprieve from US ban on American investment

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He Prohibition of the Trump era was arrested Friday by a U.S. federal judge, who ruled that Washington lacked “substantial evidence” to support its claim that Xiaomi is owned or controlled by the Chinese military.
Days before President Joe Biden took office in January, the U.S. Department of Defense added Xiaomi to a list of companies it said were linked to the Chinese military. The companies on the list were subject to severe restrictions, including the American investment prohibition.

If U.S. District Judge Rudolph Contreras had not issued a precautionary order, the ban would have taken effect Monday, according to court documents.

Shares of Xiaomi rose to 12% on Monday in Hong Kong. Shares rose more than 7%, on track since December.

Initial news of Xiaomi’s listing on the Department of Defense led to a 10% immersion in the company’s shares. At the time, Xiaomi denied ownership or control by the Chinese military, and later filed a lawsuit looking for its removal from the list.

The court “is a little skeptical that heavy national security interests are really involved here,” Contreras said in his opinion Friday, adding that the court supported Xiaomi’s argument that the ban would cause “irreparable damage” to the company by causing “serious reputation and irreparable economic injury.”

Xiaomi said Sunday in a presentation on the Hong Kong stock exchange that it was doing so he was “satisfied” with the decision to temporarily suspend the ban and said he would continue to push the court to permanently withdraw from the Department of Defense list.

The Department of Defense did not respond outside of U.S. business hours to a request for comment on its next steps in the case.

In the weeks leading up to Biden’s inauguration, the Trump administration intensified its campaign against Chinese companies. In addition to Xiaomi, the Pentagon added eight other companies to its list in mid-January, including Luokung Technology, a Chinese map software developer listed on the Nasdaq. Luokung was also scheduled to stop trading on Monday, but the company announced last week that its suspension has been postponed until May because the Department of Defense misspelled the company name when it was first added to the agency list.

Other Chinese companies also continue to experience consequences of Trump-era restrictions. The New York Stock Exchange announced late last month which would eliminate CNOOC, China’s third-largest oil company, to comply with the order banning U.S. investment in certain companies that former President Donald Trump signed in November. Its shares ceased trading on March 9.

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