Technology Mar 13

DC judge halts ban on US investment in China's Xiaomi

District Court tells of scepticism of government's claim that prohibition was in national interest, suggests phone maker likely to win a full reversal as the litigation unfolds

DC judge halts ban on US investment in China's Xiaomi
Shoppers wear face masks against the Covid-19 pandemic as they visit the Xiaomi store in Kyiv. Photo: Reuters

(ATF) A Washington DC federal judge on March 12 temporarily blocked the US Department of Defense from restricting investment in Chinese smartphone maker Xiaomi.

Officials in mid-January added Xiaomi and eight other firms to a list of what it calls Communist Chinese Military Companies (CCMC) that requires American investors to divest their holdings.

Xiaomi in late January filed a complaint seeking to be removed from the list, and US District Judge Rudolph Contreras put a temporary halt to the ban for Xiaomi.

"The Department of Defense’s CCMC designation process as to Xiaomi was deeply flawed and failed to adhere to several different ... requirements," Contreras wrote in a 26-page opinion seen by Asia Times Financial.

Contreras said Xiaomi was likely to win a full reversal of the ban as the litigation unfolds. "The court concludes that plaintiffs are highly likely to succeed on the merits... fulfilling the first preliminary injunction requirement."

The judge said he doubted the US government's claim that the ban was in the national interest. 

"The court is somewhat sceptical that weighty national security interests are actually implicated here," he wrote.

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