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US president Trump vows to work with China for ZET 'back to business, fast'
ZTE said last week that it had halted “major operating activities” because it could not get needed American components. It has 75,000 employees and says it has business in more than 160 nations.Photo: AFP/Getty Images
 
U.S. President Donald Trump said on Sunday that he and Chinese President Xi Jinping are working to give Chinese telecom company ZTE Corp "a way to get back into business, fast." Trump's instructions to the Commerce Department, stated in a tweet, come as Chinese and U.S. officials prepare for talks in Washington with China's top trade official Liu He to resolve an escalating trade dispute between the world's two largest economies. 
 
Trump's proposed reversal will likely ease relations between the United States and China. The world's two biggest economies have already proposed tens of billions of dollars in tariffs in recent weeks, fanning worries of a full-blown trade war that hurt global supply chains as well as business investment plans.
 
In trade talks in Beijing earlier this month, China asked the United States to ease sanctions on ZTE, China's largest publicly listed telecoms gear maker, reported Chinese media. ZTE relied on U.S. companies such as Qualcomm and Intel for components. 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 said last week that it had halted “major operating activities”after being imposed a Denial Order by the United States Department of Commerce. On Sunday morning, President Trump surprised many in Washington when he indicated a willingness to rethink the punishment. He also appeared to walk back from brinkmanship that has threatened the United States’ trade talks with China.
 
According to a New York Times report, the overture appeared to be off-key for an administration that has been reliably strident on what it has called unfair Chinese trade practices. Mr. Trump’s concern in his tweet about Chinese jobs — which echoed Beijing’s talking point on the issue — also runs counter to his vows to restore American jobs lost to China.
 
Still, by saying the United States would work to bring ZTE back to life, Mr. Trump took pressure off the American-Chinese relationship at a crucial moment. Mr. Trump’s meeting with the North Korean leader, Kim Jong-un, has been scheduled for next month and will hinge on China, which has fashioned itself as an intermediary with Mr. Kim.
 
Last month the Commerce Department banned shipments of American technology to ZTE for seven years, saying that the company broke sanctions and then lied about carrying out the punishment. The department said on Sunday that it had no comment.
 
The company had already agreed last year to a $1.2 billion fine in connection with those violations. But now, barred from using American microchips, software and other components, ZTE has been facing the prospect of being unable to manufacture its telecommunications equipment and smartphones.
 
Chinese officials raised objections to the penalties on ZTE when an American negotiating team visited Beijing this month. The American officials had brought a list of demands for the Chinese government that included a halt to all subsidies to advanced manufacturing industries. No deal was reached.
 
Mr. Trump was criticized by members of Congress for his efforts to protect ZTE. “You should care more about national security than Chinese jobs,” Representative Adam Schiff, Democrat of California, said in a tweet. Senator Chuck Schumer, Democrat of New York, tweeted, “How about helping some American companies first?”
 
The prospective shutdown of ZTE has been seen as major leverage in continuing trade discussions between China and the United States over Chinese trade practices. If Mr. Trump was announcing a huge concession with his tweet, it was without any indication of what he might have gotten in return.
 
In reality, ZTE represents much more to China than merely jobs. As a maker of the equipment that undergirds cellular networks, the company plays a crucial role in China’s innovation drive and its push to influence technology outside its borders.
 
The American government is also investigating ZTE’s main Chinese rival, Huawei, for breaking American sanctions against a number of countries, including Iran and North Korea. Much larger than ZTE and far more critical to China’s industrial policy plans, Huawei could be a much more significant chip in trade negotiations.
 
 
 

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