US blacklists Xiaomi, CNOOC, Skyrizon, Raising Heat on China

The US government has blacklisted Chinese smartphone maker Xiaomi Corp. and China's third-largest national oil company for alleged military links, heaping pressure on Beijing in President Donald Trump's last week in office. The Department of Defense added nine companies to its list of Chinese companies with military links, including Xiaomi and state-owned plane manufacturer Commercial Aircraft Corp. of China (Comac).

US investors will have to divest their stakes in Chinese companies on the military list by November this year, according to an executive order signed by Trump in November. Xiaomi did not immediately respond to a request for comment.

Xiaomi Corp. overtook Apple Inc. as the worlds No. 3 smartphone maker by sales in the third quarter of 2020, according to data by Gartner. Xiaomi's market share has grown as Huawei's sales have suffered after it was blacklisted by the U.S. and its smartphones were cut off from essential services from Google.

Separately, the Commerce Department put China National Offshore Oil Corp. (CNOOC) on the entity list, an economic blacklist that forbids U.S. firms from exporting or transferring technology with the companies named unless permission has been obtained from the U.S. government. The move comes after about 60 Chinese companies were added to the list in December, including drone maker DJI and semiconductor firm SMIC.

CNOOC has been involved in offshore drilling in the disputed waters South China Sea, where Beijing has overlapping territorial claims with other countries including Vietnam, the Philippines, Brunei, Taiwan, and Malaysia.

“China's reckless and belligerent actions in the South China Sea and its aggressive push to acquire sensitive intellectual property and technology for its militarisation efforts are a threat to U.S. national security and the security of the international community,” U.S. Commerce Secretary Wilbur Ross said in a statement.

“CNOOC acts as a bully for the Peoples Liberation Army to intimidate Chinas neighbors, and the Chinese military continues to benefit from government civil-military fusion policies for malign purposes,” Ross said.

CNOOC did not immediately comment.

Chinese state-owned company Skyrizon was also added to the economic blacklist, for its push to “acquire and indigenise foreign military technologies,” Ross said.

Beijing Skyrizon Aviation, founded by tycoon Wang Jing, drew U.S. criticism for an attempt to take over Ukraines military aircraft engine maker Motor Sich in 2017. The concern was that advanced aerospace technology would end up being used for military purposes.