Trump Vows to Help Sanctioned Chinese Tech Company, Citing Job Losses

Ivan Schwartz
May 14, 2018

US President Donald Trump has told the US Commerce Department to get ZTE Corp., the massive Chinese telecom equipment maker, back into business after denying the company export privileges in April in a withering statement on ZTE's "egregious" behaviour.

As a presidential candidate, Donald Trump said in 2015: "China, taking our jobs, taking our money".

Trump announced on Twitter he is working with the Chinese government and ordered the U.S. Department of Commerce to find a way to help the company continue to operate after a U.S. trade ban imposed last month that's cut into its revenue.

ZTE's shutdown is perhaps the most severe sanction facing a single company in the escalating trade tension between the United States and China.

The U.S. military banned ZTE from selling products on its bases earlier this month over surveillance concerns. ZTE misled the Department of Commerce.

The U.S. ban has additionally been interpreted as a possible salvo in the burgeoning trade war between the Trump administration and China, and through that lens, the action may have given the U.S. leverage in trade negotiations.

ZTE's troubles with the USA government are also playing out amid broader fears of an ascendant Chinese tech industry.

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American companies are estimated to provide 25 percent to 30 percent of the components used in ZTE's equipment, which includes smartphones and gear to build telecommunications networks.

ZTE's failure to comply with the 2017 Commerce Department settlement included not reprimanding or cutting bonuses to 35 employees tied to the wrongdoing, and making false statements, the Commerce Department previously found.

ZTE also sells handsets to United States mobile carriers including AT&T, T-Mobile and Sprint.

ZTE's fibre-optic networks depend on U.S. components and its cheap smartphones sold en masse overseas are powered by USA chips and the Android operating system.

"This is entirely unprecedented", said Doug Jacobson, an export controls and sanctions attorney for Jacobson Burton Kelley who represents suppliers that do business with ZTE.

"There's no legal mechanism for this. They are not simply going to be able to resume business as usual", he said. Lumentum Holdings and Acacia Communications Inc. sold key optical equipment.

Other reports by GizPress

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