The US Defense Department on Thursday added nine Chinese firms, including Xiaomi, to a list of companies the agency claims are owned or controlled by China's military. Businesses on the list are subject to harsh restrictions, including a ban on American investment.
The addition is worrisome news for Xiaomi, which recently surpassed Apple (AAPL) to become the world's third largest smartphone maker, according to market intelligence firm IDC. The company's stock plunged 10% during morning trade in Hong Kong on Friday.
The Pentagon's list also included the Commercial Aircraft Corporation of China (Comac), a major, state-owned Chinese plane maker that the country wants to build up as an answer to Boeing (BA) and Airbus (EADSF).
The Defense Department said in a statement that it is "determined to highlight and counter" the relationship between China's military and firms that "appear to be civilian entities" but which support the military with advanced technology and expertise.
China's Ministry of Foreign Affairs did not immediately respond to a request for comment from CNN Business. But Beijing has previously criticized Washington for its actions, and has said it would take "necessary measures" to safeguard the interests of Chinese firms.
The US Commerce Department also put CNOOC, China's largest offshore oil producer, on another list that effectively cuts it off from American supplies and technology. The company was already on the Defense Department's list. CNOOC's stock edged down slightly in Hong Kong.
"CNOOC acts as a bully for the People's Liberation Army to intimidate China's neighbors," said Commerce Secretary Wilbur Ross in a statement, referring to the country's military. His agency claimed that CNOOC has been harassing and threatening offshore oil and gas exploration in the South China Sea.
CNN Business has reached out to Xiaomi, CNOOC, Comac and other companies added to the US government lists on Thursday, but has yet to receive a response.
The moves are the latest in a slew of actions the Trump administration has taken against Beijing in the weeks leading up to Biden's inauguration, and could complicate US-China relations for the incoming government.
Before Thursday, the Pentagon had already added 35 Chinese companies to its military list, including chipmaker SMIC and tech firm Huawei. The Commerce Department has also imposed restrictions on many companies. (SMIC has denied that it has a relationship with the Chinese military, while Huawei has denied various US allegations that it poses a risk to national security.)
The New York Stock Exchange also announced last week that it would delist three Chinese telecom company stocks to comply with US President Donald Trump's executive order banning American investment in certain companies.
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