Xiaomi sues US government for blacklisting

The Chinese smartphone giant Xiaomi sued the US government for placing the company on a Pentagon blacklist which forbids Americans from investing in it. The Beijing based company filed a lawsuit in the United States District Court of Columbia naming the US Defense secretary Lloyd Austin and Treasury secretary Janet Allen as defendants.

Xiaomi made a move after the US government included the company in a list of firms designating them as 'Communist Chinese Military Companies' (CCMC). These companies allegedly have ties with the People's Liberation Army of China. The Trump administration used the list to implement an order banning American investors from buying securities from Xiaomi.

The company called it unconstitutional and sought a court ruling to reverse the banning order. In the lawsuit, Xiaomi expressed concerns that banning investors would cause 'immediate and irreparable harm' and hurt its global reputation. They further added that the US government had not provided any evidence to link them with the Chinese Army and argue that designating the company as CCMC, without explanation or sufficient evidence, was an arbitrary and capricious decision and a violation of the Administrative Procedure Act.

"Xiaomi is not owned or controlled or otherwise affiliated with the Chinese government or military, nor is it owned or controlled by any entity affiliated with the Chinese Defence industrial base," the company said in the court filing.

"With a view to protecting the interests of the global users, partners, employees and stakeholders of the company, the company had pleaded to the courts to declare the decision illegal and that it be reversed," Xiaomi added in a statement.

The company's share dropped 12% after touching all-time highs in the first week of the year. American investors like BlackRock Inc, the Vanguard and State Street Corp had to divest their holdings.