US President Donald Trump’s administration on Thursday blacklisted Chinese smartphone manufacturer Xiaomi Corp (小米) for alleged military links along with the nation’s third-biggest oil company over its drilling in the South China Sea, part of a final push to ratchet up pressure on Beijing before US president-elect Joe Biden takes office.
Xiaomi was one of nine firms added to the US Department of Defense’s list of Chinese military companies. Other firms include state-owned planemaker Commercial Aircraft Corp of China Ltd (中國商用飛機有限公司), which is central to China’s goal of creating a narrow-body plane that can compete with Boeing Co and Airbus SE.
Meanwhile, the US Department of Commerce’s move against China National Offshore Oil Corp (CNOOC, 中國海洋石油), the nation’s main deepwater explorer, denies it access to US technologies without specific permission.
Photo: Bloomberg
It follows a decision last month to blacklist more than 60 other Chinese companies.
The new raft of curbs mark a late push by Trump to ensure his pressure campaign against China stays in place long after he leaves office next week.
While Biden and many Democrats say they oppose Trump’s tactics on China, the restrictions will give the new president increased leverage over Beijing when his team negotiates on trade with leaders of the world’s second-largest economy.
Biden has pledged to work with allies to develop a more coherent strategy against China, though it is not clear whether there would be any immediate shifts in policy.
Under an executive order signed by Trump last year targeting what it calls China’s abusive business practices, US investors will need to unwind stakes in designated companies by November.
Xiaomi surpassed Apple Inc in smartphone sales in the third quarter, according to the International Data Corp. It joined Hong Kong’s Hang Seng Index in September last year after grabbing market share from Huawei Technologies Co (華為) as US sanctions on Huawei deepened.
Unless the ban against Xiaomi is reversed, the smartphone maker risks being delisted from US exchanges and deleted from global benchmark indices.
China Mobile Ltd (中國移動), China Telecom Corp (中國電信) and China Unicom Hong Kong Ltd (中國聯通) were removed by MSCI Inc last week, while S&P Dow Jones Indices is to drop CNOOC from its gauges next month.
Xiaomi shares fell as much as 12 percent in Hong Kong trading before paring its losses to close down 10.3 percent. Shares of its suppliers also tumbled.
CNOOC’s listed unit, CNOOC Ltd, fell as much as 2 percent before rising 1.7 percent. CNOOC is the smallest of China’s so-called big three state-owned oil majors after China National Petroleum Corp (中國石油天然氣) and China Petrochemical Corp (中國石油化工), also known as Sinopec.
Its operations in the South China Sea have proved controversial with neighbors, because China claims drilling rights in waters far from its borders, and within 200 miles (322km) of countries like Vietnam and the Philippines.
“China’s reckless and belligerent actions in the South China Sea and its aggressive push to acquire sensitive intellectual property and technology for its militarization efforts are a threat to US national security,” US Secretary of Commerce Wilbur Ross said in a statement.
“CNOOC acts as a bully for the People’s Liberation Army to intimidate China’s neighbors, and the Chinese military continues to benefit from government civil-military fusion policies for malign purposes,” he said.
The Trump administration has now listed 44 Chinese companies effectively owned by the People’s Liberation Army under a 1999 law, which authorizes the president to potentially impose sanctions on them.
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