Xiaomi, CNOOC, Comac: Chinese companies lend a hand to new US restrictions

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

The Department of Defense said in a statement that it is “determined to highlight and counter” the relationship between the military and Chinese companies that “appear to be civilian entities,” but that support the military with advanced technology and experience.

China’s Ministry of Foreign Affairs did not immediately respond to a request for comment from CNN Business. But Beijing has previously criticized Washington for its actions and said it would take “necessary steps” to safeguard the interests of Chinese companies.

The U.S. Department of Commerce also placed CNOOC, China’s largest offshore oil producer, on a list other than effectively closing off U.S. supplies and technology. The company was already on the Department of Defense list. CNOOC shares declined slightly in Hong Kong.

“CNOOC is acting as a harasser for the People’s Liberation Army to intimidate China’s neighbors,” Secretary of Commerce Wilbur Ross said in a statement, referring to the country’s military. His agency claimed that CNOOC has been harassing and threatening offshore oil and gas exploration in the South China Sea.

CNN Business contacted Xiaomi, CNOOC, Comac and other companies added to the U.S. government lists on Thursday, but has not yet received a response.

US banks are abandoning products related to Chinese stocks after the NYSE ban

These measures are the latest 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.

By Thursday, the Pentagon had already added 35 Chinese companies to its military list, including chip maker SMIC and technology firm Huawei. The Commerce Department has also imposed restrictions on many companies. (SMIC has denied having a relationship with the Chinese military, while Huawei has denied several U.S. allegations that it poses a risk to national security).

The New York Stock Exchange also announced last week that it would withdraw three shares of Chinese telecommunications companies to comply with U.S. President Donald Trump’s executive order banning U.S. investment in certain companies.

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