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U.S. Blacklisted China’s Xiaomi Because of Award Given to Its Founder

HONG KONG—U.S. officials blacklisted Chinese smartphone giant Xiaomi Corp. as a company with military ties partly due to an award given to the company’s founder for his service to the state, the U.S. Department of Defense said in a legal filing.

Lei Jun, the chief executive officer and founder of Xiaomi, received the award of “Outstanding Builder of Socialism with Chinese Characteristics” in 2019 from the Ministry of Industry and Information Technology. Xiaomi touts the award—given to 100 Chinese executives that year—on Mr. Lei’s biography page on the company’s website and in its annual report.

The award—coupled with Xiaomi’s ambitious investment plans in advanced technologies such as 5G and artificial intelligence—was enough for the Defense Department in January to add Xiaomi to a list of companies that support China’s military, according to the filing. The designation prohibits Americans from investing in the company, the world’s third-largest smartphone seller.

The U.S. rationale for adding Xiaomi to its list was laid out in a court filing by the Defense Department in response to a lawsuit in U.S. District Court in Washington, D.C., by the Chinese company seeking to overturn the military designation. The filing, which appeared last week but hasn’t previously been reported, for the first time shed light on the department’s reasoning in adding a company to the list.

A Xiaomi spokeswoman didn’t immediately comment on the filing. The company has previously denied any affiliations with the Chinese military and says it sells products and services solely for civilian and commercial use.

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