Trump Extends Lifeline to Sanctioned Tech Company ZTE

Trump Extends Lifeline to Sanctioned Tech Company ZTE

Trump Extends Lifeline to Sanctioned Tech Company ZTE

Now, Trump says he's working with President Xi Jinping of China to get the company back on its feet.

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.

Last month, the Commerce Department barred American firms from exporting parts to the Chinese smartphone company for seven years, saying that ZTE had violated a previous settlement of criminal and civil charges for making illegal shipments to North Korea and Iran. A spokesman for the Commerce Department did not immediately respond to a request for comment Sunday.

The suspension of ZTE's operations follows several recent actions by the USA government that hindered its business prospects.

And Chinese officials protested against the ban in discussions with a high-level United States delegation last week and said the USA side would discuss the matter with President Donald Trump. We are talking about goods at $ 60 billion.

ZTE is one of the world's biggest telecommunications equipment makers. Washington and Beijing have proposed tens of billions of dollars in tariffs in recent weeks, fanning worries of a full-blown trade war that could hurt global supply chains and dent business investment plans.

The move is seen as a concession to Beijing ahead of high-stakes trade talks that will take place this week.

Trump's announcement that he planned to help resurrect ZTE also came after trade talks in China earlier in May - talks at which Chinese officials implored the ease the sanctions against ZTE, according to a Reuters news agency report.

"China and the US cooperate in the field of trade, but the talks of past administrations for many years has been one-sided in favor of China". As a result, the Trump administration barred US firms for seven years from exporting critical microchips and other parts to ZTE, the world's fourth-largest smartphone manufacturer.

ZTE paid over US$2.3 billion to 211 USA exporters in 2017, a senior ZTE official said on Friday.

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.

USA officials imposed the ban last month, saying ZTE failed to abide by an agreement to stop selling to Iran and North Korea. The ban is the result of ZTE's failure to comply with that agreement, the Commerce Department said.

But a Washington D.C. -lawyer for several of ZTE's USA suppliers said that reversing the sanctions on the Chinese tech giant won't be as simple as Trump makes it sound.

James Lewis, a technology specialist with the Center for Strategic and International Studies, said the tensions are likely to prompt China to step up efforts to disconnect from the USA tech sector.

ZTE relies on US companies such as Qualcomm Inc, Intel Corp and Alphabet Inc's Google.

As one of the world's largest telecom equipment makers, ZTE relied on USA companies for components. "They are not simply going to be able to resume business as usual", he said.

U.S. military exchanges also have stopped selling smartphones made by ZTE and Huawei Technologies after the Pentagon warned that the devices pose a security risk to military personnel and operations, the defence department said earlier this month.

"As of now, the company maintains sufficient cash and strictly adheres to its commercial obligations subject to compliance with laws and regulations", ZTE said.

Trump's announcement drew sharp criticism from a Democratic lawmaker, who said the move was jeopardizing US national security. "You should care more about our national security than Chinese jobs".

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

The ban also hurts ZTE's ability to provide services, such as repairs to infrastructure, to customers in other countries and regions in which it operates. As of the third quarter of 2017, ZTE had a 12 percent market share for smartphones nationwide.

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