Xiaomi Corporation sued the US Departments of Defense and Treasury Friday over its designation at a “Communist Chinese military company.”

Xiaomi was designated as a military company by the Department of Defense (DOD) on January 14 under the 1999 National Defense Authorization Act. Under former president Donald Trump’s Executive Order 13959, American investors cannot purchase or invest in the securities of any company designated as a communist Chinese military company. Investors have until January 14, 2022, to divest from such companies.

Allegations of military connections have dogged Chinese electronics and telecommunications companies for years. Huawei was initially designated as a military company and has long faced associations with the Chinese military. The founder of Huawei, Ren Zhengfei, was an engineer in the People’s Liberation Army. Xiaomi’s ties are less direct, however. The DOD alleges that Xiaomi is connected with China’s Military-Civil Fusion strategy. The DOD stated:

The Department is determined to highlight and counter the People’s Republic of China’s (PRC) Military-Civil Fusion development strategy, which supports the modernization goals of the People’s Liberation Army (PLA) by ensuring its access to advanced technologies and expertise acquired and developed by even those PRC companies, universities, and research programs that appear to be civilian entities.

Xiaomi alleges in its complaint that the company is primarily controlled by its two co-founders, Lei Jun and Bin Lin, who control more than 75 percent of voting power in the company. Moreover, three of Xiaomi’s largest investors are American investment companies: BlackRock, Vanguard, and State Street.

Xiaomi seeks a preliminary injunction against the designation as a military company, on the grounds that an officer of the company is an American, subject to the divestment order, and would lose control over corporate governance. This is in addition to the losses of access to capital markets and damage to Xiaomi’s reputation.