“The Department is determined to highlight and counter the development strategy of the Civilian-Military Fusion of the People’s Republic of China (PRC), which supports the modernization objectives of the People’s Liberation Army (PLA) by ensuring its access to cutting-edge technologies and expertise acquired and developed by even the PRC companies, universities and research programs that appear to be civilian entities. “
Xiaomi, however, denies its connection to the Chinese military and has said it will take action to protect the company and its shareholders. He said in a statement:
“The company reaffirms that it provides products and services for civil and commercial use. The Company confirms that it is not owned, controlled, or affiliated with the Chinese military, and is not a “Chinese Communist Military Company” defined in the NDAA. “
CNBC reports that Xiaomi shares fell 10.6% on opening Friday (China time) after the news broke. The U.S. Military Blacklist is separate from the Entity List, the country’s commercial blacklist that prevents U.S. companies from working with Huawei. Besides Xiaomi, the administration has also added the planemaker Comac to the military blacklist, where it joins state-owned oil giant CNOOC and China’s largest chipmaker SMIC.