Business

Trump Vows to Help ZTE 'Get Back Into Business'

Trump Vows to Help ZTE 'Get Back Into Business'

Jobs in China are at risk, he said.

Donald Trump on Sunday took to his Twitter account to announce that had "instructed" the United States Commerce Department help the Chinese phone-making giant ZTE "get back into business" after USA sanctions forced the tech firm to shut down in April of this year.

Victory dance? Matt Gold, an adjunct Fordham University law professor and former deputy assistant U.S. trade representative, said the latest problems over ZTE are unlikely to worsen relations because "the current situation is about as bad as it can get without a complete freefall". Trump wrote on Twitter, saying he is working with Chinese President Xi Jinping on a solution.

ZTE's current struggles have made it the most visible effect thus far of a brewing trade war between the United States and China.

A U.S. blockade has choked off the revenue of the No. 2 Chinese telecom company, which regards the next two weeks as crucial as it faces potential collapse. It's also the fourth largest provider of smartphones in the United States.

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Shortly after Trump's tweet, a Democratic lawmaker questioned the move to help the Chinese company, given numerous warnings about ZTE's alleged threat to USA national security. Commerce Secretary Wilbur Ross announced last March that a $1.19 billion penalty had been levied against ZTE for violating USA sanctions prohibiting the sale of telecom equipment to Iran and North Korea. "ZTE made false statements to the U.S. Government when they were originally caught and put on the Entity List, made false statements during the reprieve it was given, and made false statements again during its probation".

Experts said Trump's policy reversal was unprecedented. ZTE had been working to get the denial order overturned, and had pegged its hopes on broader bilateral trade talks between the U.S. and China.

Recently, though, the Trump administration also has sought to limit the encroachment of Chinese telecommunications firms in the United States. The company's controlling shareholder is Shenzhen Zhongxingxin Telecommunications Equipment, a Chinese state-owned corporation. ZTE has denied the charges, but the accusation nevertheless led to some major carriers dropping the manufacturer (Chinese company Huawei has been hit with similar claims too).

"Our intelligence agencies have warned that ZTE technology and phones pose a major cyber security threat", Representative Adam Schiff, a Democrat, said on Twitter. It's possible Trump may be using ZTE's situation as a bargaining chip with China so he can negotiate a new trade deal with the country. So it is hard to conclude an agreement that will benefit both countries.


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