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Xiaomi sues US government for blocking Americans from investing in Chinese company

Xiaomi has sued the US government over the investment ban that blocks Americans from investing in the Chinese tech company.

twitter-logoAnkita Chakravarti | January 30, 2021 | Updated 17:42 IST

Highlights

  • S President Donald Trump had placed the company on the Pentagon blacklist that bars Americans from investing in the company.
  • Trump had alleged that Xiaomi has strong associations with the Chinese military.
  • Challenging the ban, Xiaomi has sued the US government.

Xiaomi has sued the US government over the investment ban that blocks Americans from investing in the Chinese tech company. Earlier this month, ex-US President Donald Trump had placed the company on the Pentagon blacklist that bars Americans from investing in the company. Trump had alleged that Xiaomi has strong associations with the Chinese military. However, the allegations were later denied by the smartphone maker. Xiaomi had said that it is not a "Communist Chinese Military Company".

Now despite the fact that Trump is no longer the President of the United States, the investment ban continues. Challenging the ban, Xiaomi has sued the US government. It has now submitted an application to reverse the ban order.

In their court filing, Xiaomi had stated that if the ban continues it will face "imminent, severe, and irreparable harm". It further alleged that the ban is unlawful and should be enjoined.

"This action challenges the Trump Administration's unlawful designation on January 14, 2021, of Plaintiff Xiaomi, a consumer electronics company, as a Communist Chinese military company ("CCMC") subject to Executive Order 13959. As a result of that designation, U.S. persons will no longer be able to purchase publicly traded Xiaomi securities or derivatives of those securities as of March 15, 2021, and must divest their holdings by January 14, 2022. As explained below, the designation of Xiaomi as a CCMC (the "Designation") is unlawful and should be enjoined. By failing to provide a reasoned explanation for the Designation, and by making a designation decision that necessarily runs counter to any accurate evidence before the agencies, the Departments of Defense and Treasury engaged in arbitrary and capricious decision making, in violation of the Administrative Procedure Act ("APA")," the court filing read.

"As relevant here, the Order prohibits transactions by any U.S. persons in publicly traded securities of certain companies that the Department of Defense, in consultation with the Department of the Treasury, designates as a "Communist Chinese military company." President Trump amended Executive Order 13959 on January 13, 2021. Exec. Order No. 13974, 86 Fed. Reg. 4875 (Jan. 13, 2021) (attached as Ex. B). As amended, the Order provides that the prohibitions on transactions of CCMC securities or derivatives of those securities by U.S. persons take effect 60 days after a company is designated," it further read.

Xiaomi had earlier revealed that it has complied with the law and confirmed that it is not owned, controlled or affiliated with the Chinese military, and is not a "Communist Chinese Military Company".

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