Xiaomi’s shares plunged on the Hong Kong Stock Exchange on Friday after the United States included the world’s third-largest mobile phone maker on a blacklist of companies deemed a threat to national security.
This last-minute inclusion of Chinese companies under sanctions is the latest chapter in four years of diplomatic tensions between Beijing and Washington under the presidency of Donald Trump.
With only six days to go before the end of the outgoing US president’s term, authorities made a series of announcements against the Chinese mobile phone maker, as well as against the video app TikTok and the oil giant CNOOC.
Xiaomi, which surpassed Apple by becoming the world’s third-largest smartphone maker in 2020, is one of the nine Chinese companies on this blacklist, due to its alleged ties to the Chinese military.
This measure means that US investors will not be able to buy Xiaomi shares and will have to sell the ones they have unless future President Joe Biden reverses the measure.
Xiaomi is one of the largest Chinese companies on this blacklist and its shares fell more than 10% at the close on the Hong Kong Stock Exchange.
In a statement, the US Department of Defense said it was “determined to expose and counteract the development strategy of the civil-military merger of the People’s Republic of China” that would allow it to access essential technology and security data.
Washington had already adopted similar sanctions against companies such as phone maker Huawei and electronic card giant Smic, thus slowing their ability to impose key technologies and compete internationally.
“The Trump administration has expanded the concept of national security, abused the power of the state and repeatedly used a strong hand without reason against Chinese companies,” said the spokesman for the Chinese Foreign Ministry, Zhao Lijian on Friday.
– South China Sea –
In November, the Donald Trump administration published a decree prohibiting Americans from investing in Chinese companies that provide or support the Chinese military to prevent them from accessing American technologies.
China denounced this measure and accused the United States of “harassment”, while vowing “to take the necessary measures” to defend the rights of Chinese companies.
In early January, the New York Stock Exchange announced its decision to withdraw three Chinese companies from the telecommunications sector after receiving “specific new slogans” from the US Treasury department.
Another Commerce Department list also prohibits Chinese companies, including the Chinese national oil group CNOOC and Skyrizon, which specializes in the airline industry, from being eligible to operate on Wall Street.
For US companies, these measures complicate exports of technology products to the companies on this list.
The State Department also limited the granting of visas to blacklisted executives of Chinese companies, as well as government officials and the military.
US Commerce Secretary Wilbur Ross said the CNOOC oil group is on the list because of its “reckless and bellicose actions in the South China Sea and its aggressive policy to acquire sensitive technology and intellectual property rights 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 global maritime trade route, and rich in underwater resources and biodiversity, is at the center of escalating tensions between Beijing and Washington.
CNOOC’s stock was less affected than Xiaomi’s and lost less than 1% this Friday in Hong Kong.
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