Chinese companies targeted by a widespread investment ban imposed by former President Donald Trump are considering suing the US government after a federal judge suspended a similar blacklist for Beijing-based smartphone maker Xiaomi on Friday.
Lawyers familiar with the matter said some of the banned Chinese companies are in talks with law firms such as Steptoe & Johnson and Hogan Lovells, emboldened by US District Judge Rudolph Contreras’ preliminary order halting Xiaomi’s listing. from alleged Chinese Communist military companies that are subject to an investment ban.
The Trump administration’s decision to blacklist Xiaomi Corp, which slashed $ 10 billion of its market share and dropped its shares by 9.5 percent in January, would have forced investors to completely ditch it. their interests in the company.
“Companies are reaching out to lawyers to challenge the listings and the reasons for them,” said Wendy Wysong, managing partner in the Hong Kong office of Steptoe & Johnson, a Washington-based global law firm. Wysong and a person familiar with Hogan Lovells, another global law firm, declined to name the companies involved in the discussions.
Contreras pointed to the US government’s “deeply flawed” process to include the company in the investment ban, based on just two key criteria: its development of 5G technology and artificial intelligence, which the Defense Department alleges are “essential for modern military operations”, and an award given to Xiaomi’s founder and chief executive, Lei Jun, of an organization said to help the Chinese government remove barriers between the commercial and military sectors.
The judge noted that 5G and AI technologies were rapidly becoming the standard in consumer electronics, and that more than 500 entrepreneurs had received the same award as Lei since 2004, including the leaders of an infant formula company.
“The events that led to Xiaomi’s appointment are almost ridiculous, and I think they will definitely lead to other companies seeking help,” said Washington attorney Brian Egan, a former legal adviser at both the White House and the State Department who he also works at Steptoe.
GOVERNMENT WITHOUT DECIDING ON THE WAY FORWARD
In a joint filing on Tuesday, the government said it had not decided the “appropriate way forward” in the Xiaomi case in light of the judge’s decision.
A spokeswoman for the US Department of Justice, which is defending the case, declined to comment. A Defense Department spokeswoman referred the questions to the White House, which has not responded.
Xiaomi and 43 other companies were added here in the last months of the Trump administration to the blacklist, which was mandated by a 1999 law requiring the Defense Department to publish a compilation of companies “owned or controlled” by the Chinese military. .
With the aim of cementing a hard line with China and fitting his Democratic successor, Joe Biden, into hard-line politics, Trump signed an executive order that was later expanded to prohibit all American investors from holding securities in the aforementioned companies starting. November 11, 2021.
Other companies included in the list are video surveillance giant Hikvision, China National Offshore Oil Corp (CNOOC), and China’s leading chipmaker, Semiconductor Manufacturing International Corp.
SMIC, Hikvision and CNOOC did not immediately respond to requests for comment.
Luokung Technology Corp, a listed map technology company, also sued the US government earlier this month, and is expected to seek preliminary relief similar to that given to Xiaomi.