The United States has agreed to remove Chinese electronics giant Xiaomi from the Entity List, which had banned it from trading with U.S.-based technology companies.
“The parties have agreed upon a path forward that would resolve this litigation without the need for contested briefing,” a Xiaomi legal filing says, noting that the U.S. Department of Defense now agrees that vacating Xiaomi’s position on the list “would be appropriate.” The two will file a joint proposal to delist the firm later this month.
Xiaomi was placed on the Entity List in the waning days of the previous presidential administration, which had been waging a unilateral war against Chinese-based technology companies in a bid to prop up U.S.-based businesses. The most infamous example, of course, is Huawei, which was put on the Entity List in May 2019 and has met even more stringent blocks on its ability to conduct business since.
Xiaomi immediately sued, arguing correctly that the DoD had justified the change because Xiaomi was a Chinese military firm, which, of course, it is not. Xiaomi is a consumer electronics firm only and, unlike Huawei, it doesn’t participate in the networking market. And in March, a U.S. court agreed with the firm and placed a temporary hold on the ban.
“[Xiaomi] has been in compliance with law and operating in compliance with the relevant laws and regulations of jurisdictions where it conducts its businesses,” a Xiaomi statement at the time explained. “The Company reiterates that it provides products and services for civilian and commercial use. The Company confirms that it is not owned, controlled, or affiliated with the Chinese military, and is not a ‘Communist Chinese Military Company’ defined under the NDAA. The Company will take appropriate course of actions to protect the interests of the Company and its shareholders.”
It’s reasonable to wonder whether this concession will lead to a change in Huawei’s status. But the Biden administration has extended a ban on the use of China-based networking equipment. And the U.S. Congress will likely introduce bipartisan legislation aimed at helping U.S. technology companies compete better against Chinese firms.