US targets Xiaomi in Donald Trump’s late anti-China push

The Chinese manufacturer surpassed iPhone-maker Apple in smartphone sales in the third quarter of last year

Customers browse Xiaomi smartphones at a retail store in Barcelona. The Chinese company produced more than 146 million smartphones last year, according to market intelligence firm TrendForce. BloomberShow more

The US administration blacklisted Chinese smartphone maker Xiaomi for alleged military links, part of a final push to ratchet up pressure on Beijing before President-elect Joe Biden takes office.

Xiaomi is one of the nine firms added to the Defence Department’s list of Chinese military companies. Others include state-owned plane maker Commercial Aircraft Corporation of China, or Comac, which is central to China’s goal of creating a narrow-body plane that can compete with Boeing and Airbus.

Xiaomi surpassed Apple in smartphone sales in the third quarter of 2020, according to the International Data Corporation. It joined Hong Kong’s Hang Seng Index in September after grabbing market share from Huawei as US sanctions on the Chinese company deepened.

Unless the ban on Xiaomi is reversed, the smartphone maker risks being delisted from the US exchanges and deleted from global benchmark indexes.

Xiaomi shares fell as much as 12 per cent in Hong Kong, while its suppliers also tumbled. FIH Mobile, which helps it assemble smartphones, plunged 14 per cent. Component suppliers including Largan Precision, Sunny Optical Technology and AAC Technologies also fell.

The new raft of curbs marks a late push by President Donald Trump to ensure his campaign against China stays in place long after he leaves office next week.

While Mr Biden and many Democrats say they oppose Mr Trump’s tactics against China, the restrictions will give the new president increased leverage over Beijing when his team negotiates on trade with leaders of the world’s second-largest economy.

China’s Foreign Ministry and China National Aviation did not immediately respond to a request for comment. Spokespeople for Xiaomi had no immediate comment.

Mr Biden has pledged to work with allies to develop a more coherent strategy against China, though it is not clear whether there will be any immediate shifts in policy.

Under an executive order signed by Mr Trump last year, the US investors will need to unwind stakes in designated Chinese companies by November.

The Trump administration has now listed 44 Chinese companies under a 1999 law which authorises the president to potentially impose sanctions on them.

Mr Trump signed an order in November barring American investments in Chinese firms owned or controlled by the military in a bid to put pressure on Beijing.