Stocks in Beijing-based electronics outfit Xiaomi leapt today after the firm was given a preliminary injunction removing it from a Trump-era US blacklist targeting "Communist Chinese Military Companies" (CCMC).
The manufacturer of smartphones, tablets, laptops and more, yesterday deposited a statement on Twitter to celebrate the ruling.
In a court judgement filed on Friday [PDF], District of Columbia judge Rudolph Contreras called the initial decision that placed Xiaomi on the blacklist in January this year as "arbitrary and capricious," further clarifying:
The Department of Defense's CCMC designation process as to Xiaomi was deeply flawed and failed to adhere to several different ADA requirements. As a result, the Court concludes that Plaintiffs are highly likely to succeed on the merits on their APA claims, fulfilling the first preliminary injunction requirement.
Smartphone giant and self-developed mobile chip maker Xiaomi joined firms like state-owned China National Offshore Oil Corporation and TikTok on the list on 14 January. The Pentagon cited a state-sponsored award to co-founder Lei Jun for "Outstanding Builder of Socialism with Chinese Characteristics" as one reason for the ban.
The move resulted in Xiaomi being banned from listing on the US Exchange and preventing US investors from dealing in company-issued securities. Xiaomi sued to be taken off the list later that month, insisting that its products were for civilian and commercial use.
The filing granting the preliminary injunction on Friday added that the CCMC designation had been "based on two generally innocuous facts derived from the company's annual report" and revealed that the defendant's counsel conceded there was no evidence of technology transfer from Xiaomi to the People's Republic of China. They then highlighted that the CCMC designation had not been used for 20 years until the Trump administration began to label companies as such right before their departure.
"This lack of use also undermines the notion that the CCMC designation process is critical to maintaining this nation's security," said the ruling.
Prior to the case decision, Xiaomi announced a programme to buy back up to $1.29bn worth of its shares, which had lost a third of their value while the company was on the blacklist.
Stock prices soared more than 10 per cent in Hong Kong on Monday following the announcements of the buyback programme and the preliminary injunction. ®