(Reuters) – Chinese companies targeted by a general investment ban imposed by former President Donald Trump are considering US government lawsuit after a federal judge suspended a similar blacklist for Beijing smartphone maker Xiaomi on Friday .
Lawyers familiar with the matter have said some of the banned Chinese companies are in talks with law firms, including Steptoe & Johnson and Hogan Lovells, encouraged by U.S. District Judge Rudolph Contreras’ preliminary order to stop Xiaomi’s listing of alleged Chinese communist military companies that are subject to an investment ban.
The Trump administration’s blacklisting of Xiaomi Corp., which took out $ 10 billion in market share and reduced its shares by 9.5% in January, would have forced investors to completely give up their stakes. in the company.
“Companies are turning to lawyers to challenge the lists and the reasons for the listings,” said Wendy Wysong, managing partner of the Hong Kong office of Steptoe & Johnson, a Washington-based global law firm. Wysong and a person familiar with Hogan Lovells, another global law firm, declined to name the companies involved in the talks.
Contreras pointed to the US government’s “deeply flawed” process of including the company in the investment ban, based on only two key criteria: the development of 5G technology and artificial intelligence, which the Department of Defense says are “essential to modern military operations.” an award given to Xiaomi founder and CEO Lei Jun from an organization that said it would help the Chinese government remove barriers between the commercial and military sectors.
The judge noted that 5G and AI technologies have quickly become standard in consumer electronics and that more than 500 entrepreneurs have received the same award as Lei since 2004, including the leaders of an infant formulation company.
“The facts that led to Xiaomi’s appointment are almost laughable and I think it will absolutely lead to additional companies seeking help,” said Washington attorney Brian Egan, a former legal adviser to both the White House and the State Department. and at the Feet.
GOVERNMENT UNDECCATED ON THE WAY FORWARD
In a joint case on Tuesday, the government said it had not decided “the right way forward” in Xiaomi’s case, in light of the judge’s decision.
A spokeswoman for the US Department of Justice, which is defending the case, declined to comment. A Defense Department spokeswoman asked questions to the White House, which did not respond.
Xiaomi and 43 other companies were blacklisted here in the declining months of the Trump administration, which was mandated by a 1999 law requiring the Department of Defense to publish a compilation of companies “owned or controlled” by the Chinese military.
In an attempt to consolidate a hard line on China and frame his Democratic successor, Joe Biden, in tough policies, Trump signed an executive order that was later extended to ban all U.S. investors from holding securities in companies called starting with November 11, 2021.
Other listed companies include video surveillance giant Hikvision, China National Offshore Oil Corp. (CNOOC) and China’s largest chip maker, Semiconductor Manufacturing International Corp.
SMIC, Hikvision and CNOOC did not immediately respond to requests for comment.
Luokung Technology Corp., a listed mapping technology company, also sued the US government earlier this month and expects to seek preliminary assistance similar to that provided by Xiaomi.
Reporting by Karen Freifeld and Alexandra Alper; Additional reporting by Mike Stone; Montage by Peter Cooney