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Trump Extends Lifeline to Sanctioned Tech Company ZTE
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Yingying·Hou Publication Time:2018-05-17 13:24:45 Having22read

President Donald Trump said he was working with Chinese President Xi Jinping to keep ZTE Corp. in business, throwing an extraordinary lifeline to the Chinese telecommunication giant that has been laid low by U.S. moves to cut off its suppliers.

The surprise intervention comes less than a month after ZTE was hit with an order banning U.S. companies from selling components to the Chinese business. The U.S. Commerce Department directed companies to stop exporting to ZTE in mid-April, saying the Chinese firm violated the terms of a settlement resolving evasion of U.S. sanctions against Iran and North Korea.

Mr. Trump said in a tweet that he is working with Mr. Xi to get ZTE “a way to get back into business, fast. Too many jobs in China lost.” He said the Commerce Department has been instructed to “get it done!”

Mr. Trump’s comments about the company and concern about Chinese jobs come as the U.S. and China are locked in high-stakes negotiations over trade and intellectual property. Both countries are threatening to slap tariffs on tens of billions of dollars of the other’s products. Mr. Trump has regularly blamed China for U.S. job losses and Beijing’s policies for the U.S. trade deficit, making his shift in tone notable.

U.S. concerns about ZTE go beyond its evasion of sanctions. For years, the U.S. has accused equipment made by Shenzhen-based ZTE and its larger crosstown rival Huawei Technologies Co. of being a national security threat, an accusation that both companies have denied.

Some Wall Street observers have speculated that the administration hoped to use the ZTE sanctions as leverage to soften Chinese resistance in other trade negotiations. One possible indication of that was the Commerce Department’s failure to impose about $300 million in fines it was eligible to collect when it announced the penalties on ZTE earlier this year.

The Commerce Department also has signaled in recent days that it was trying to expedite ZTE’s appeal, suggesting the agency was sensitive to the urgency of ZTE’s situation.

The Wall Street Journal reported Saturday that in its efforts to have the ban stayed, ZTE has told U.S. authorities that process and human-resource errors, not a plan of systematic deception, were responsible for the lapses in fully complying with its 2017 settlement, according to a person familiar with the matter. The company also believes that the ban is a disproportionate penalty, this person said.

The sudden sales ban placed ZTE at the sharp end of a rising trade dispute between Washington and Beijing that has included tit-for-tat tariffs. Technology has become a focus of tensions, with the U.S. accusing China of transferring key technologies back home and unfairly supporting domestic champions.

ZTE employs roughly 75,000 people world-wide and is the fourth-largest mobile phone vendor in the U.S., selling 19 million phones in America last year, making it the firm’s biggest market.

Backed by the Chinese government as a tech national champion, ZTE works alongside Huawei in the race to develop next-generation 5G wireless technology—an area in which Qualcomm is viewed by Washington as a crucial U.S. competitor.


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