Xiaomi, CNOOC, Comac: Chinese companies hit new US restrictions

Xiaomi, CNOOC, Comac: Chinese companies hit new US restrictions

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The U.S. Department of Defense on Thursday added nine Chinese companies, including Xiaomi, to a list of companies owned or controlled by China’s military, according to the agency. Companies on the list are subject to severe restrictions, including a ban on US investments.
The addition is worrying news for Xiaomi, which recently surpassed appeal (AAPL) to become the world’s third largest smartphone maker, according to market intelligence firm IDC. The company’s share fell 10% during morning trading in Hong Kong on Friday.

The Department of Defense said in a statement that it was “determined to emphasize and counter the relationship between China’s military and companies that are ‘seemingly civilian entities’ but that support the military with advanced technology and expertise.

The Chinese Foreign Ministry did not immediately respond to a request for comment from CNN Business. But Beijing has previously criticized Washington for its actions, saying it would take “necessary measures” to protect the interests of Chinese businesses.

The U.S. Department of Commerce also put CNOOC, China’s largest overseas oil producer, on another list that effectively cuts it off from U.S. supplies and technology. The company was already on the list of the Department of Defense. CNOOC’s inventory decreased slightly in Hong Kong.

“CNOOC is acting as a bully for the People’s Liberation Army to intimidate China’s neighbors,” Trade Minister Wilbur Ross said in a statement, referring to the country’s military. Its agency claims that CNOOC is harassing and threatening foreign oil and gas exploration in the South China Sea.

CNN Business on Thursday reached out to Xiaomi, CNOOC, Comac and other companies added to the U.S. government list, but has yet to receive a response.

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The move is the latest in a string of actions the Trump administration has taken against Beijing in the weeks leading up to Biden’s inauguration, and could complicate US-China relations for the incoming government.

Before Thursday, the Pentagon had already added 35 Chinese companies to its military list, including chipmaker SMIC and technology firm Huawei. The Department of Commerce has also imposed many business restrictions. (SMIC has denied any involvement with the Chinese military, while Huawei has denied several US allegations that it poses a risk to national security.)

The New York Stock Exchange also announced last week that it would remove three Chinese telecommunications companies to ban U.S. President Donald Trump’s executive order banning U.S. investments in certain companies.

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