Smartphone giant Xiaomi reels as USA ramps up China blacklist


The order might get reversed when President-Elect Joe Biden takes the commands in his hands later this month, but that's just speculation.

Shares in Chinese technology giant Xiaomi collapsed more than 11 per cent in Hong Kong trade Friday after the U.S. put it on a blacklist banning Americans from investing in it, as the Trump administration ramps up its battle with Beijing.

The sanctions include visa restrictions on some Chinese individuals, specifically executives from state-owned companies, as well as officials in the Chinese Communist Party and the Chinese Navy.

It's unclear where these allegations stem from, but it's concerning nonetheless.

Those companies will be subject to a new USA investment ban which forces American investors to divest holdings of the blacklisted firms by November 11, 2021.

As CNBC reports, Xiaomi is one of nine new companies added to the list "in accordance with the statutory requirement of Section 1237 of the National Defense Authorization Act for Fiscal Year 1999, as amended". The company's operations and access to technology remain unaffected in the short term, but investors being forced to pull out could certainly hamper the company in the medium term.

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The Commerce Department also said Chinese company Skyrizon was being added to the Military End-User (MEU) List for "its capability to develop, produce or maintain military items, such as military aircraft engines".

Huawei, the supplier of the second most used brand of cellphones in South Africa, appears on the same list.

The US government continues its assault on Chinese companies. The United States has long opposed China's extensive territorial claims in the South China Sea, a potentially resource-rich area that is also a strategic trade route.

Senior U.S. officials told reporters on Thursday the new CNOOC restrictions would not apply to crude, refined fuels and liquid natural gas and do not apply to existing joint ventures with CNOOC that do not operate in the South China Sea. But the blacklisting will hurt sentiment more than the company's fundamentals, and the stock decline could be short-lived, he added.

Under the authority of Section 1237 of the National Defense Authorization Act, Xiaomi will not be able to acquire goods and services from US vendors - many Chinese companies are already subject to this restriction being placed on the Commerce Department's Entity List.

CNN Business has also reached out to CNOOC, Comac and other companies added to the United States government lists on Thursday, but has yet to receive a response. With less than a week left before the Biden Administration takes over, there is a possibility of the order being overturned.