Smartphone-maker Xiaomi Corp. is the latest major Chinese tech firm to turn to American courts to challenge actions against them by former U.S. President Donald Trump, suing to block an order banning U.S. investors from buying its stock.
Trump issued an executive order in November stating that U.S. investors would be barred from trading in companies with ties to China’s military, designated as “Communist Chinese military companies.”
“The Department of Defense… did not provide any explanation for its decision to designate Xiaomi as a (Communist Chinese military company), let alone identify the factual basis on which the designation was based,” Xiaomi said in the lawsuit. “Nor has the agency otherwise provided Xiaomi with this information, or any opportunity to explain why the designation was erroneous.”
Xiaomi is the latest company targeted by the former Trump administration to look to the U.S. court system to stop actions that say are illegal and unjustified under U.S. law. Mostly private companies have taken such actions to date, including Tencent Holdings Ltd.-backed WeChat, TikTok and Huawei.
The US Court of Appeals in Washington has signaled skepticism in mid-December over the Trump administration’s continuing efforts to ban new TikTok downloads. In January, the US Court of Appeals in San Francisco signaled it was also largely skeptical of efforts to overturn the decision of a federal magistrate judge, who last year granted a preliminary injunction to WeChat users in the United States, ruling that the government restrictions amounted to an outright ban, violating their right of free speech.
China’s three major wireless carriers, which are all state-owned, have also been slated for bans under the same action that now threatens Xiaomi. In that instance, all three have appealed a decision by the New York Stock Exchange to delist their shares, with hearings set for mid-April.