United States will help China's ZTE 'get back into business'

US Bans American Companies From Selling to China's ZTE

US Bans American Companies From Selling to China's ZTE

The president said in a tweet today that too many jobs in China have been lost, after the phone maker allegedly violated USA trade sanctions. It's surprising to see this action confirmed by the President, and such concern over Chinese jobs given that the US Department of Commerce is ostensibly protecting US interests in enforcing its technology export sanctions. "Commerce Department has been instructed to get it done", Donald Trump wrote on Twitter. It said he and Chinese President Xi Jinping are working together on a solution for ZTE.

The commerce department barred ZTE from purchasing components in the United States for seven years after it was caught violating the terms of a $1.2bn settlement agreed last year in which ZTE admitted illegally selling equipment that included sensitive U.S. parts to Iran and North Korea.

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.

But U.S. officials said this year that ZTE didn't discipline all the employees involved in the violations. That's a key technology battle between the US and China - and one that China has a chance to win.

As one of the world's largest telecom equipment makers, ZTE relied on USA companies such as Qualcomm and Intel for components.

While the ZTE case has a specific legal basis, the ban comes as US-China trade relations have hit a rough patch, amid an intense rivalry for supremacy in key technology fields such as artificial intelligence and 5G, the next-generation wireless systems in the works.

Secretary of State Mike Pompeo and Interior Secretary Ryan Zinke, who represented districts in Kansas and Montana, respectively, had asked senior Obama administration officials in a 2016 letter to reconsider their decision at the time to relieve ZTE of sanctions for selling technological goods to Iran.

That cut off access to the United States technology it needs to build most of its products, from Qualcomm Inc.'s semiconductors to optical chips from Lumentum Holdings Inc.

In a 2017 settlement, ZTE pleaded guilty to evading USA sanctions against Iran and North Korea and agreed to pay a $1.2 billion combined penalty, breaking the record for such sanction penalties.

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The official said the recent ban was a grossly disproportionate penalty that ignored the strides ZTE had made towards complying with USA laws.

ZTE said on Wednesday that it had halted "major operating activities". And he has trumpeted his efforts to safeguard U.S.jobs even if it means creating economic strain in other countries.

ZTE relies on USA companies such as Qualcomm Inc, Intel Corp and Alphabet Inc's Google. American companies are said to supply 25% to 30% of components used by ZTE, which makes smartphones and gear for telecom networks. The Trump administration has taken a hard line on what it says are unfair trade practices by the Chinese government, proposing about $50 billion worth of tariffs on products and technology that advance Beijing's industrial development goals. Too many jobs in China lost.

Republican Representative Robert Pittenger, a sponsor of legislation that would strengthen the USA national security review process for foreign investment, said after the Commerce ban was announced that the United States "must be vigilant against Chinese threats to both our economic security and national security". Reuters notes that U.S. suppliers like Intel and Qualcomm will likely suffer "a significant impact" from the Commerce Department ban.

Other experts said Trump's policy reversal was unprecedented.

Trump's announcement drew sharp criticism from a Democratic lawmaker, who said the move was jeopardizing USA national security.

Our intelligence agencies have warned that ZTE technology and phones pose a major cyber security threat.

ZTE suppliers including Acacia, Oclaro, Lumentum Holdings, Finisar, Inphi and Fabrinet, all fell sharply after the ban was announced.

It looks like ZTE may get a reprieve.

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