After Joe Biden won the presidential election in the USA, many analysts asked themselves whether the new President would change the framework of the country’s foreign policy and thus improve the relationship with China.
And now the situation with Huawei and Xiaomi demonstrates that there is unambiguous answer yet. Let’s get into the details of what is going on with Chinese companies in the USA.
Americans may invest in Xiaomi again
On March 13th, Reuters announced that the US Supreme Court temporarily lifted the ban off Xiaomi, one of the Chinese most popular tech companies: American investors were again allowed to buy its shares and contract with it.
The Court stated that the evidence base provided by Donald Trump’s administration failed to persuade it in any cooperation between the world’s largest smartphone-maker and Chinese defense forces.
What’s happened to Xiaomi shares?
Remember that on January 15th, during mister Trump’s presidency, Xiaomi got on the black list of the US government alongside 8 more Chinese companies. They got fully isolated from American investments. At that moment, Xiaomi (HK: 1810) shares dropped by 10.6% from 32.6 to 29.3 HKD.
On March 12th, when rumors started spreading that the ban might be lifted, Xiaomi’s stocks grew on Honk Kong exchange by 4.12% from 21.85 to 22.75 HKD. On March 15th, when the official info from the Supreme Court appeared, the shares went on growing, and at the time when this article was being prepared, they had already grown by 7.25% to 24.4 HKD.
Huawei feeling even worse
On March 12th, the very same Reuters made it known that the administration of the new President initiated amendments to the licenses of US companies working with Huawei.
Note that this company producing smartphones, telecommunication equipment, and other gadgets also got on the black list. Experts say that the new limitations will violate some already-signed agreements with the Chinese conglomerate.
Huawei (SZ:002502) shares reacted moderately to the news about new limitations. In Shenzhen Stock Exchange, the quotations only lost 1.03%, reaching 2.87 Chinese yuan per share.
What do we have here? On the one hand, Xiaomi has some limitations removed, though temporarily, so it now has access to American investments. On the other hand, American companies cooperating with Huawei get their lives made tougher.
Looking at this controversial and emotional situation, I have trouble understanding whether Biden’s administration tries to smooth out the sharp edges in US-Chinese relationship or goes by the same way of aggression. What’s your opinion? Tell us in the comments below.