According to Bloomberg, Chinese smartphone giant Xiaomi Corp (1810:Hong Kong) will be removed from the U.S. blacklist after settling with the U.S. Defense Department, who designated the firm as a Communist Chinese Military Company.

The U.S. Defense Department has now agreed that a final order vacating the designation "would be appropriate", according to a Tuesday court filing.

The filing says the parties have agreed on a path forward that could resolve the "litigation without the need for contested briefing". The parties involved are negotiating specific terms and will submit a separate joint proposal by May 20.

There was no immediate response from Xiaomi on the matter. Representatives of the U.S. Defense Department were also not immediately available for comment. Xiaomi's shares rose as much as 6.7% in Hong Kong Stock Exchange on Wednesday.

This January, the Trump administration added Xiaomi to a blacklist of alleged Chinese military companies. Those companies would be subject to a new U.S. investment ban that forced U.S. investors to stop buying securities and divest their holdings in blacklisted companies by Nov. 11, 2021.

Xiaomi subsequently sued the U.S. Departments of Defense and Treasury, asking the court to vacate the U.S. Defense Department's designation.

In March, US District Judge Rudolph Contreras in Washington issued a preliminary injunction removing Xiaomi from the blacklist and suspending the ban on US investors buying the company's securities.

Source: https://www.bloomberg.com/news/articles/2021-05-12/xiaomi-u-s-government-agree-to-drop-firm-from-blacklist