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In the last days of his presidency, Donald Trump moved against another Chinese tech giant. On Wednesday, the Trump administration officially added Xiaomi, along with eight other companies, to its list of “Chinese Communist military companies”.
Companies designated as Chinese Communist military companies by the Department of Defense have been prevented from receiving investments from American citizens or organizations. If not canceled, the designation would mean that existing investors in the United States would have to divest from Xiaomi.
Xiaomi is one of the largest phone manufacturers in the world, with only Samsung and Huawei selling more phones, according to an IDC survey. With a global market share of 13.1%, thanks to its popularity in China, Latin America and Europe, Xiaomi sells even more phones than Apple. (Apple sells fewer phones than competitors, but makes a lot more profit per phone sold.)
Xiaomi did not immediately respond to a request for comment.
The Redmi Note 9T, one of the cheapest phones from Xiaomi.
Xiaomi
Xiaomi’s designation is different from that the Trump administration gave Huawei, China’s largest technology company. Huawei is on the United States Department of Commerce’s “List of Entities”, which prohibits American companies from doing business with it. That’s why recent Huawei phones have been operating without access to Google’s Play Store or U.S. chip makers.
Huawei was included in the List of Entities, next to ZTE, because much of its business is telecommunications equipment, such as the installation of 4G and 5G networks. This part of Huawei’s operations – not the manufacture of phones, for which it is best known in the West – was determined by the Trump administration to be a national security risk. Xiaomi only sells consumer electronics, which is probably why it was put on the less severe black list.
The Department of Defense established the list of companies associated with or controlled by the People’s Liberation Army in 1999.
“The key to the development of the military, intelligence and security apparatus in the PRC is the country’s large, seemingly private economy,” said a recent executive order from Trump. “Through the national military-civil fusion strategy, the PRC increases the size of the country’s military-industrial complex, forcing Chinese civilian companies to support their military and intelligence activities.”
Trump’s disapproval of Chinese companies was a hallmark of his presidency. In addition to Huawei and ZTE, Trump also tried to ban the TikTok social media platform. Last week, he signed an executive order which prohibits transactions with eight Chinese apps, including WeChat Pay and AliPay.