Pentagon removing Chinese tech giant from blacklist after court loss

The Pentagon on Tuesday officially said Chinese tech giant Xiaomi Corp. will be taken off of a Trump-era blacklist that had prevented U.S. investment in the company. 

Lawyers for the Defense Department and Xiaomi on Tuesday said in a joint filing in D.C. federal court that it had agreed on the removal of the smartphone maker from the blacklist after a U.S. court in March granted a preliminary injunction against former President Trump’s January designation of Xiaomi as one of several Communist Chinese military companies, or CCMCs.

U.S. District Judge Rudolph Contreras ruled in March that the restriction could cause Xiaomi, which has denied claims of ties to China’s military, to “suffer irreparable harm in the form of serious reputational and unrecoverable economic injuries.”

The Wall Street Journal reported that the Pentagon on Tuesday agreed to a final order vacating Xiaomi’s designation as a CCMC, and the two parties agreed to “negotiate over the specific terms of the order,” which will be provided to the court on or before May 20. 

A Xiaomi spokeswoman said the multinational electronics company was “paying close attention to the development of this issue.”

The Hill has reached out to the Pentagon for additional information on the agreement. 

The decision by the Pentagon Tuesday marks a change from the Trump administration’s tough stances on business with China, punishing Chinese companies for alleged connections and support for the Chinese government. 

Trump’s November executive order sought to “highlight and counter the People’s Republic of China’s (PRC) Military-Civil Fusion development strategy, which supports the modernization goals of the People’s Liberation Army (PLA) by ensuring its access to advanced technologies and expertise acquired and developed by even those PRC companies, universities, and research programs that appear to be civilian entities,” according to a Defense Department statement. 

CNBC reported that shares of Xiaomi rose as much as 6.5 percent following news of the Pentagon’s decision to remove the company from its blacklist. 

The move comes as Contreras last week ordered a temporary halt to the blacklisting of Chinese mapping and data company Luokung Technology Corp. 

Last month, two leading Republican members on the House Homeland Security Committee specifically targeted Xiaomi in their concerns about security and privacy threats posed by Chinese tech giants. 

Committee ranking member John Katko (R-N.Y.) and Rep. Andrew Garbarino (R-N.Y.) wrote in a letter to Commerce Secretary Gina Raimondo and Homeland Security Secretary Alejandro Mayorkas that they were worried companies like Xiaomi could take the place of telecom giant Huawei, which was largely blocked from doing business in the U.S. by the Trump administration due to its alleged ties to the Chinese state.