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Xiaomi has filed a lawsuit against the American Departments of Defence and Economic Affairs. The smartphone maker considers the investment ban imposed by the US unjustified.

Last month, the United States put Xiaomi on the Entity List. This list includes companies that the US thinks are allied with an enemy army. Such companies face trade restrictions. In the case of Xiaomi, American investors are no longer allowed to trade in the company’s securities.

Irreparable damage

“Xiaomi faces imminent, severe, and irreparable harm if the Designation remains in place and the restrictions take effect,” the company said in the suit filed in Columbia. The company insists that it is not owned or controlled by the Chinese government. Nor would it have any links to the Chinese government or military, let alone be owned or controlled by an entity affiliated with China’s defence.

Sensitive technology

In addition to the ban on trading Xiaomi securities, the measures also ensure that ‘sensitive’ technology from China can no longer be imported. What this technology entails exactly is not entirely clear. Chip manufacturer Qualcomm is still allowed to trade with Xiaomi but must have withdrawn its shares in Xiaomi by 11 November. Xiaomi can continue to manufacture phones with American chips and the Android operating system including Google Play services.

Trumps last attack on China

The ban on Xiaomi was one of the last in a series of attacks from Donald Trump before he left office as President of the United States. Earlier, Trump had already listed Chinese phone manufacturers Huawei and ZTE and drone maker DJI did not escape the measures either. Meanwhile, Joe Biden has taken Trump’s position, but it seems unlikely that he will want to reverse the measures against China any time soon.

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