A federal judge has blocked the US Department of Defense from placing restrictions on Chinese smartphone maker Xiaomi that were set to take effect next week.
Just before former President Trump left office in January, the Department of Defense designated Xiaomi as a “Chinese Communist military company,” (CCMC) making it subject to Trump’s executive order banning the US from investing in such companies.
But US District Judge Rudolph Contreras on Friday argued that the US Departments of Defence and Treasury “has not made the case that the national security interests at stake here are compelling,” issuing a preliminary injunction what he called “irreparable harm” to Xiaomi, saying the designation was “arbitrary and capricious.”
“Xiaomi plans to continue to request that the court declare the designation unlawful and to permanently remove the designation,” the spokesperson said.
Xiaomi in late January; filed a complaint in a Washington court seeking to be removed from the list, calling its inclusion “unlawful and unconstitutional” and arguing it was not controlled by the People’s Liberation Army.
In his Friday ruling; Contreras called into question the Trump administration’s argument that “civilian Chinese companies” like Xiaomi allow the Chinese government to “directly threaten the United States homeland.”
“The court is somewhat skeptical that weighty national security interests are actually implicated here,” the judge wrote.
Xiaomi is the third-largest smartphone manufacturer in the world by volume. In the third quarter, it surpassed Apple Inc. in smartphone sales, according to the International Data Corporation.
In November; former President Donald Trump signed an order barring American investment in Chinese firms owned or controlled by the military in a bid to pressure Beijing over what the U.S. has described as abusive business practices. The U.S. has also pursued bans on popular Chinese-owned apps like WeChat and TikTok, invoking threats to national security.