The s1260H / CMC list issue is quite amusing. The biggest function of the CMC list is to limit DOD's ability to directly pay for services with said company. Even secondary payment ie through a contractor is acceptable under this legislation.
Quite a poorly discussed topic within the reporting and even investment community. The legal reach of the law is important to understand.
The context of this law is that it's been around for decades, with Trump recently utilising it in his first term. Recall a few interesting things:
1 - the DOD itself "forgot" to update the list annually as required by the legislation. It tells you how (un)serious this piece of legislation is.
2 - Xiaomi managed to get itself off he list before.
3 - In the judgement, it was noted that the DOD cannot overreach versus the powers provided under the law. That is, it cannot whimsically assign companies under this designation. The definition of what is associated with Chinese military is uncertain in that regard, but the previous arguments put forward by the DOD were rejected as a whole such as that the founder of Xiaomi received an award from the Chinese government.
4 - Note that this is still in lower courts and not contested at higher levels and hence legal certainty is still low.
5 - Finally, a lot of online commentators on the Chinese side fail to understand how American government operates. They extrapolate the coordination ability of the Chinese government. This is an overly generous assumption.
The s1260H / CMC list issue is quite amusing. The biggest function of the CMC list is to limit DOD's ability to directly pay for services with said company. Even secondary payment ie through a contractor is acceptable under this legislation.
Quite a poorly discussed topic within the reporting and even investment community. The legal reach of the law is important to understand.
The context of this law is that it's been around for decades, with Trump recently utilising it in his first term. Recall a few interesting things:
1 - the DOD itself "forgot" to update the list annually as required by the legislation. It tells you how (un)serious this piece of legislation is.
2 - Xiaomi managed to get itself off he list before.
3 - In the judgement, it was noted that the DOD cannot overreach versus the powers provided under the law. That is, it cannot whimsically assign companies under this designation. The definition of what is associated with Chinese military is uncertain in that regard, but the previous arguments put forward by the DOD were rejected as a whole such as that the founder of Xiaomi received an award from the Chinese government.
4 - Note that this is still in lower courts and not contested at higher levels and hence legal certainty is still low.
5 - Finally, a lot of online commentators on the Chinese side fail to understand how American government operates. They extrapolate the coordination ability of the Chinese government. This is an overly generous assumption.