Xiaomi, CNOOC, Comac: Chinese companies have cracked down on new US restrictions

The US 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 US investment.
The addition is worrying news for Xiaomi, which has recently outgrown Apple (AAPL) to become the world’s third-largest smartphone maker, according to market intelligence firm IDC. The company’s shares fell 10% on Friday during morning trading in Hong Kong.

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

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 protect the interests of Chinese companies.

The US Department of Commerce has also placed CNOOC, China’s largest offshore oil producer, on another list that effectively cuts it off from US supply and technology. The company is already on the Department of Defense’s list. CNOOC shares fell slightly in Hong Kong.

“CNOOC is acting as an aggressor 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 army. His agency claimed that the CNOOC harassed and threatened offshore oil and gas exploration in the South China Sea.

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

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The moves are the latest in a series 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 new government.

By Thursday, the Pentagon had already added 35 Chinese companies to its military list, including chip maker SMIC and technology company 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 various US allegations that it poses a risk to national security.)

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

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