Xiaomi, CNOOC, Comac: Chinese companies slapped with new US restrictions

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The U.S. Defense Department on Thursday added nine Chinese companies, including Xiaomi, to a list of companies that the agency said are owned or controlled by the Chinese military. The companies on the list are subject to severe restrictions, including a ban on US investment.
The addition is disturbing news for Xiaomi, which recently overtook Apple (AAPL) become the third largest smartphone maker in the world, according to business intelligence company IDC. The company’s stock plunged 10% on Friday morning trading in Hong Kong.

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

China’s Foreign Ministry did not immediately respond to a request for comment from CNN Business. But Beijing has previously criticized Washington for its actions and said it will take “necessary measures” to safeguard 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 supplies and technology. The company was already on the Defense Ministry’s list. The CNOOC title fell slightly in Hong Kong.

“The CNOOC is acting like a tyrant for the People’s Liberation Army to intimidate China’s neighbors,” Commerce Secretary Wilbur Ross said in a statement, referring to the country’s military. His agency claimed that CNOOC harassed and threatened oil and gas exploration in the South China Sea.

CNN Business contacted Xiaomi, CNOOC, Comac and other companies added to U.S. government lists on Thursday, but has yet to receive a response.

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These steps are the latest in a series of actions the Trump administration took against Beijing in the weeks leading up to Biden’s inauguration, and could complicate U.S.-China relations for the new government.

By Thursday, the Pentagon had already added 35 Chinese companies to its military list, including chipmaker SMIC and tech company Huawei. The Commerce Department has also placed restrictions on many businesses. (The SMIC has denied having a relationship with the Chinese military, while Huawei has denied various U.S. claims that it posed a national security risk.)

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

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