HONG KONG—The U.S. Defense Department agreed to remove Xiaomi Corp. from a blacklist banning U.S. investment in the Chinese tech giant, opting against further defending a Trump administration action that alleged ties between the smartphone maker and the Chinese military.
The retreat comes two months after Xiaomi won a key victory in a federal lawsuit challenging the listing, in which a Washington, D.C., judge criticized the Pentagon’s rationale for the move and ordered a temporary halt against its enforcement.
In a one-page legal filing on Tuesday, lawyers for both Xiaomi and the Pentagon said the company’s removal from the blacklist was appropriate following the judge’s order. Shares of Xiaomi ended 6.1% higher in Hong Kong following the announcement.
In agreeing to delist Xiaomi, the Pentagon signaled a willingness to walk away from a sustained fight over one of the Trump administration’s final actions against a major Chinese tech company. Xiaomi joins a small but growing list of Chinese tech companies including the owners of Chinese social-media apps TikTok and WeChat that have successfully won courtroom reprieves against Trump-era actions.
In an emailed statement, a spokeswoman for the National Security Council said: “U.S. courts found that the Trump administration failed to develop a legally sufficient basis for imposing restrictions on the company and compelled this action. The Biden administration is deeply concerned about potential U.S. investments in companies linked to the Chinese military and is fully committed to keeping up pressure on such companies.”