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A US Federal Jude Rudolph Contreras temporarily blocked a ban on investment in the China-based company (Xiaomi). Point to be noted that the ban put in place by the US Department of Defense over alleged ties between the phone maker and Chinese military. The US District Judge wrote in a memorandum accompanying his order to suspend the ban. He wrote, “The US national security priorities are undoubtedly compelling government interests. However, the court is somewhat skeptical that weighty national security interests are actually implicated here”. The US Department of Defense officially added Xiaomi to its list of “Communist Chinese military companies during the last days in January of the Trump administration. So, the phone manufacturer was prohibited from receiving investments from US citizens or organizations, and the existing investors would need to divest.

It is noteworthy that Xiaomi later sued the US government and demanded that it should be removed from the list. A company spokesperson issued a statement at the time it was placed on the list and said, “Xiaomi reiterates that it provides products and services for civilian and commercial use. The company also confirmed that it is not owned, controlled, or affiliated with the Chinese military, and is not a ‘Communist Chinese Military Company’”. But, Reuters reported that a spokesperson said, “Xiaomi plans to continue to request that the court declare the designation unlawfully and to permanently remove the designation”. The US Department of Defense hasn’t yet made any comment on the issue.

Point to be noted that Xiaomi is one of the biggest phone manufacturers in the world. The company has said the Defense Department ban will cause immediate and irreparable harm by cutting off its access to US capital markets and limiting its ability for business expansion. The company rubs shoulders with Apple, Huawei, and Samsung when it comes to smartphone market share. Huawei has been a subject of US government concern about national security, landing on the Department of Commerce’s “Entity List”, which forbids US companies from trading with it. Huawei’s gear is used in telecommunications infrastructure. The alleged ties to China’s communist government have prompted worries about intelligence gathering.