China’s leading smartphone maker has hired one of Washington’s biggest lobbying firms as it fights back on multiple fronts against its blacklisting over alleged military ties.
The Beijing Xiaomi Mobile Software Company has hired Akin Gump Strauss Hauer & Feld to lobby on “issues regarding application of Executive Order 13959 to Xiaomi,” according to a newly disclosed lobbying filing. The registration was effective March 1.
Akin Gump partners Hal Shapiro and Charles Johnson are registered on the account. Shapiro notably served as senior adviser for international economic policy in President Bill Clinton‘s National Economic Council, while Johnson was a law clerk on the Democratic staff of the House Judiciary Committee.
BGR Government Affairs previously registered to lobby for Xiaomi as a subcontractor to the Washington law firm of Edward MacMahon, Jr. Founding partner Ed Rogers is registered to lobby on the account along with Walker Roberts, the head of BGR’s international practice, foreign assistance practice head Lester Munson, and fellow principal Maya Seiden. BGR is registered to provide “strategic counsel and advocate on issues pertaining to possible sanctions.”
Xiaomi is the first Chinese company to hire a lobbying firm explicitly for the purposes of challenging EO 13959, which President Donald Trump signed on Nov. 12, 2020. The order restricts US investments in what the US government deems to be a Communist Chinese military company (CCMC), based on criteria from the Department of Defense and the Department of Treasury.
Xiaomi was added to the list of 44 impacted companies on Jan. 14. The company sued the departments of Defense and Treasury in Washington, DC federal court on Jan. 29, arguing that its inclusion was erroneous.
“The designation of Xiaomi as a CCMC necessarily runs counter to any accurate evidence that was before the agencies,” lawyers for the company argued, “because Xiaomi is not ‘owned or controlled by, or affiliated with, the People’s Liberation Army or a ministry of the government of the People’s Republic of China,’ or ‘owned or controlled by an entity affiliated with the defense industrial base of the People’s Republic of China’.”
In its legal defense, the Department of Defense told the court that it had listed the company “partly due to an award given to the company’s founder for his service to the state,” the Wall Street Journal reported last month. US District Judge Rudolph Contreras sided with Xiaomi a week later, ordering a temporary halt to the pending investment ban to prevent the company from suffering “irreparable harm,” Bloomberg reported.
“The court is somewhat skeptical that weighty national security interests are actually implicated here,” Contreras wrote.
Lobbying records show that Xiaomi is the first Chinese company to seek lobbying help explicitly on Trump’s executive order, another designated CCMC, cloud computing company Inspur, hired former Rep. Peter Roskam (R-Ill.) of Sidley Austin last fall to lobby on Section 1237 of the National Defense Authorization Act of 1999. That section created the main pathway for CCMC designations (Chinese companies can also be designated by the Department of Defense in consultation with the US Department of the Treasury or by the Treasury Department’s Office of Foreign Assets Control, OFAC).
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At least three other technology companies that have been designated as Communist Chinese military companies hired lobbying help prior to Trump’s executive order, according to a Foreign Lobby Report analysis of lobbying filings (see chart below). They are telecommunications giant Huawei, video surveillance company Hikvision and the Shanghai-based Semiconductor Manufacturing International Corporation (SMIC).
Meanwhile other actors have been lobbying to strengthen the CCMC designation process. That includes FDD Action, which lobbied on Section 1237 in the third quarter of 2020, before Trump’s executive order. FDD Action is a 501(c)4 organization that is related to, but separate from, the Washington-based Foundation for Defense of Democracies (FDD).
Maseh Zarif, the director of congressional relations for FDD Action, defended the Section 1237 process in an email interview. Akin Gump and Xiaomi did not respond to requests for comment.
“The Biden administration should build on EO 13959 … to deny these companies the ability to access capital among American investors,” Zarif said. “The administration and Congress should also work together to explore additional policy options to address the [threat of the Chinese Communist Party’s Military-Civil Fusion strategy] and protect Americans from exposure risk at home.”
“As a nation,” he added, “we are just peeling back the extent of MCF reach in the US. The EO is focused on publicly traded securities of certain companies and should be seen as the floor rather than ceiling for defensive measures and risk mitigation.”
Zarif said he would “certainly anticipate” that Chinese companies would push back, especially those — such as Xiaomi — that stand to lose their coveted listing on US stock exchanges once labeled an MCCC.
“The US response will be critical in countering CCP influence and reach, he said, “while advancing US interests and values.”
For now the Joe Biden administration is regrouping as it ponders its next steps.
“In light of the Court’s preliminary injunction order and opinion … Defendants are continuing to deliberate as to the appropriate path forward in this litigation,” the administration told the court last week after Judge Contreras’ ruling. “These interagency deliberations will include, at a minimum, the Departments of Defense, Justice, and the Treasury, and Defendants have not yet reached a view as to the appropriate next steps.”
US-designated Communist Chinese military company
Beijing Xiaomi Mobile Software Co.
Mercury Public Affairs
Burson-Marsteller (public relations)
Huawei Technologies USA
ADLAB (public relations)
Canyon Snow Consulting
Racepoint Global (public relations)
Steptoe & Johnson
Squire Patton Boggs
Int’l Corp (SMIC)
Capitol Counsel (via Akin Gump)
Source: Lobbying Disclosure Act (Congress) / Foreign Agents Registration Act (Department of Justice)
Update: This post has been updated with mention of BGR’s lobbying for Xiaomi.