Joe Biden has just been sworn in as the 46th President of the United States, but just a week earlier, the outgoing Trump administration made a decision with some serious ramifications for a number of Chinese companies—including Xiaomi. As Reuters first reported, nine Chinese companies have been added to a blacklist of firms with alleged links to the Chinese military, including plane-makers Comac.
Despite similarities with the blacklisting of Huawei by the U.S. Commerce Department in 2019, this is a separate blacklist. While Huawei was blacklisted for alleged direct connections with the Chinese government, this list covers firms that are supposed to be linked to the military in China.
Meanwhile, the ramifications are also distinct in each cases. Huawei was banned from working with U.S.-based firms, with the most famous consequence of this being the lack of Google Mobile Services (GMS) on all new Huawei smartphones after the fact. As for the case of Xiaomi, Trump earlier signed an executive order that prohibits U.S. investment into firms on the blacklist.
Will Xiaomi phones lose Google services as well?
The short answer: no. Xiaomi isn’t prohibited from dealing with U.S. firms, which means that companies like Google can still sell their services to the Chinese tech company. However, that’s not to say that there aren’t serious consequences to this latest decision.
American investors will have to sell their stock in Xiaomi by the 11th of November 2021, which will probably see a severe drop in value for the company’s shares. This is because all U.S.-owned shares in the company will have to be sold (to non-U.S. interests) within the next 10 months or so, and Xiaomi might also lose a lot of liquid capital as a result.
It remains to be seen how Xiaomi will deal with the issue, and if the ramifications on their global business—which includes smartphones, tablets, and IoT devices—will be as severe as it has been on Huawei’s smartphone sector. The company has, in response, denied the accusations in a statement to Android Authority:
“The company has been in compliance with law and operating in compliance with the relevant laws and regulations of jurisdictions where it conducts its businesses. The company reiterates that it provides products and services for civilian and commercial use. The company confirms that it is not owned, controlled, or affiliated with the Chinese military, and is not a “Communist Chinese Military Company” defined under the NDAA. The company will take appropriate course of actions to protect the interests of the company and its shareholders.
“The company is reviewing the potential consequences of this to develop a fuller understanding of its impact on the Group. The company will make further announcements as and when appropriate.”
