Xiaomi stock fell heavily on the Hong Kong Stock Exchange on Friday, after the Chinese phone maker was blacklisted by the United States on a business blacklist due to suspected ties to the Chinese military.
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This last-minute listing of Chinese companies subject to sanctions is the ultimate realization of four years of diplomatic tensions between Beijing and Washington under the presidency of Donald Trump.
With just six days of the end of the outgoing US president’s term, the Trump administration has made a series of announcements targeting Chinese smartphone maker Xiaomi, but also popular video platform TikTok and oil giant CNOOC.
Xiaomi, which overtook Apple by becoming the world’s third-largest smartphone maker in 2020, is one of nine Chinese companies to be blacklisted, due to their alleged ties to the Chinese military.
The move means that American investors will no longer be able to buy Xiaomi securities and will even have to dispose of them unless future President Joe Biden backs down.
Xiaomi is one of the biggest Chinese companies to be on this blacklist. The stock plunged more than 10% on Friday on the Hong Kong Stock Exchange.
In a statement, the US Department of Defense said it was “determined to highlight and counter the PRC’s civil-military fusion development strategy” that would allow it to access critical data in terms of technology and security.
Similar sanctions were decided by Washington, in particular against the Chinese telecoms giant Huawei and the chip maker Smic, thus hampering their ability to import key technologies and to be competitive internationally.
Beijing on Friday blasted an “abuse of power” by the United States, which attacked Chinese companies “for no reason”.
South china sea
In November, Donald Trump’s administration issued an executive order prohibiting Americans from investing in Chinese companies suspected of supplying or supporting the Chinese military in order to prevent them from accessing American technologies.
China immediately denounced the measure, accusing the United States of “harassment” and promising to “take the necessary measures” to defend the rights of Chinese companies.
In early January, the New York Stock Exchange announced its decision to delist three Chinese companies in the telecoms sector after receiving “new specific instructions” from the US Department of the Economy.
Another list, compiled by the Commerce Department, also prohibits Chinese companies, including oil giant CNOOC and Skyrizon, which specializes in the airline sector, from being eligible for stock market indices on Wall Street.
For US companies, these measures make it harder to export technology products to companies on this list.
The State Department has also restricted the issuance of visas to executives of blacklisted Chinese companies, as well as Chinese government officials and the military.
US Secretary of Commerce Wilbur Ross said oil group CNOOC is on the list because of “its reckless and belligerent actions in the South China Sea and its aggressive policy of acquiring technology and intellectual property rights. sensitive for military purposes ”.
According to him, this “constitutes a threat to the national security of the United States and the security of the international community”.
The South China Sea, a key route for global maritime trade and among the richest in marine resources and biodiversity, is at the heart of the escalating tensions between Beijing and Washington.
“CNOOC has repeatedly threatened the exploration and extraction of oil and gas in the South China Sea, in order to increase political risk for interested foreign partners, including Vietnam,” the Commerce Ministry said.
CNOOC held up well on the Hong Kong Stock Exchange on Friday, with the title only losing 1.1% at the close.