Trump is letting ZTE get back into business


Writing on Twitter, Trump said he had issued instructions for officials to come up with a rescue plan, saying too many jobs were at risk.

President Trump takes part in a welcoming ceremony with China's President Xi Jinping in Beijing.

President Trump has intervened in the ZTE drama.

ZTE, the fourth-largest smartphone maker in the US, has been dealing with the US Commerce Department denial order that prevented US businesses from selling hardware or services to the company - a seven-year ban that forced the company to shut down "the major operating activities of the company."

"ZTE misled the Department of Commerce", Ross said. The Defense Department in April ordered military exchanges to cease selling ZTE phones on US bases.

Trump's offer for aid comes at a moment of sky-high trade tensions between the United States and China. And the Federal Communications Commission recently moved toward prohibiting U.S. Internet providers that receive federal funds from spending them on equipment made by companies such as Huawei, another major Chinese telecom player.

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

For critics worrying about a trade war between Washington and Beijing, the president added a bit of advice - "But be cool, it will all work out!" The company has already been pushing for a solution that could limit or reverse the export ban, but this doesn't guarantee that officials can give ZTE the reprieve it wants.

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

In April, the Commerce Department penalized ZTE for violating a settlement with the USA government over illegal shipments to Iran and North Korea. The ban is the result of ZTE's failure to comply with that agreement, the Commerce Department said. USA intelligence assesses that both companies could use their phones to spy remotely for the Chinese government (both ZTE and Huawei have denied these claims in the past).

Last week, Telstra said it would stop sales of ZTE smartphones, though it indicated it was "hopeful that ZTE will be able to reach a resolution to this matter soon so that we can recommence selling Telstra-branded ZTE devices".

However, other parts of the USA government, especially its intelligence agencies, have other issues with ZTE.

Companies in the USA are estimated to provide up to 30% of the components used in ZTE's products, which includes smartphones and complex equipment for telecommunications networks.

While the United States and China have threatened each other with trade tariffs, Trump has insisted that relations between Washington and Beijing have never been better and he has been working closely with Xi in efforts to persuade North Korea to abandon its nuclear program.

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". "China may now have strengthened its desire to get out from a under a scenario where the United States can do that again".

"A reversal of the ZTE decision could temporarily tamp down trade tensions by allowing the Chinese to make concessions to the USA without losing face", said Eswar Prasad, a professor of trade policy at Cornell University.

"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.

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

Accelerating independence drive 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 U.S. tech sector.

ZTE suppliers including Acacia, Oclaro, Lumentum Holdings, Finisar, Inphi and Fabrinet, all fell sharply after the ban was announced. Oclaro, which earned 18 percent of its fiscal 2017 revenue from ZTE, fell 17 percent.