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HONG KONG: Xiaomi shares collapsed on Friday (Jan 15) after the US blacklisted the smartphone giant and a host of other Chinese firms as the Trump administration aims to cement its trade war legacy against Beijing.
The avalanche of last-minute blacklists is the four-year coda of aggressive trade and diplomatic policies toward rival China under President Donald Trump.
With just six days left until Trump leaves office, US officials made a series of announcements targeting Chinese companies, including state-owned oil giant CNOOC, Xiaomi and social media favorite TikTok.
Xiaomi, which surpassed Apple last year to become the world’s third-largest smartphone maker, was one of nine startups classified by the Pentagon as “Chinese communist military enterprises.”
READ: Trump administration takes final blows against China and its companies
The action means that American investors will not be able to buy Xiaomi securities and will ultimately have to divest in the future unless the incoming presidency of Joe Biden repeals the order.
Xiaomi is one of the largest companies to have been blacklisted so far and its shares fell more than 10 percent in Hong Kong on Friday after the announcement. US chip giant Qualcomm is a major investor.
In a statement, the Defense Department said it was “determined to highlight and counter the PRC’s military-civil merger development strategy” that allowed it access to key technology and security data.
The United States has taken similar actions against other tech companies, such as Huawei and chip giant SMIC, which has hampered its ability to import key technology and compete internationally.
“IMPECCABLE AND BEAUTIFUL”
Trump issued an executive order in November prohibiting Americans from investing in Chinese companies that allegedly supplied or supported the country’s military and security apparatus, earning him a strong reprimand from Beijing.
Earlier this month, the New York Stock Exchange said it would delist three Chinese state-owned telecommunications giants to comply with the order.
READ: MSCI, FTSE Russell remove Chinese telcos from global indices
The Commerce Department also released a separate list of prohibited entities Thursday targeting companies such as CNOOC and the deep-sea explorer Skyrison, which develops military equipment.
That makes it extremely difficult for US companies to export products or technology to those companies without a hard-to-obtain license.
Commerce Secretary Wilbur Ross said CNOOC had been included in the list due to “reckless and belligerent actions in the South China Sea and its aggressive push to acquire sensitive intellectual property and technology for its militarization efforts.”
“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 policies of civil-military fusion for evil purposes,” Ross said.
NEW “ADVERSARY” TECHNOLOGICAL RULES
Territorial disputes in the South China Sea have been aggravating for years, and Beijing ignored protests from the United States as it built a series of artificial islands to expand its military and commercial reach in the region, believed to have valuable oil deposits. and gas, which Washington values. to 2.5 trillion dollars.
China claims almost the entire South China Sea, including the Spratly Islands, although parts of it are claimed by Taiwan, the Philippines, Brunei, Malaysia, and Vietnam.
“CNOOC has repeatedly harassed and threatened offshore oil and gas exploration and extraction in the South China Sea, with the aim of increasing the political risk for interested foreign partners, including Vietnam,” the Commerce Department said.
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CNOOC’s share price was unaffected by the news on Friday, rising 0.12% in Hong Kong.
Meanwhile, the Commerce Department also announced new rules for trading communications technology and equipment with “foreign adversaries,” including China, Russia, Iran, North Korea, Cuba and Venezuela.
The rule, to be published on Friday, will take effect in 60 days. Officials said it was decided after careful review with the private sector and was published in the hope that the incoming Biden administration would keep the policies in place.
The goal is to protect against data and national security vulnerabilities in software and hardware, and it would outline a six-month review process before any bans are implemented.
A senior administration official confirmed that the new rule would apply to TikTok, the video app that Trump has banned from operating in the United States.
