Donald Trump says working with Xi Jinping to save telecom giant ZTE

Randal Sanchez
May 14, 2018

He said the "Commerce Department has been instructed to get it done!" because "too many jobs in China lost".

In a remarkable development, President Trump has thrown an olive branch to controversial Chinese telecom firm ZTE less than a week after it ceased its main business following restrictions from the US government.

The Commerce Department last month imposed a seven-year ban on United States companies shipping technology to ZTE, saying it had allowed workers to disregard U.S. trade controls on North Korea and Iran. The department banned shipments of USA technology to ZTE for seven years, saying the company had failed to reprimand employees who violated U.S. trade controls on Iran and North Korea.

ZTE relies on U.S. companies such as Qualcomm and Intel.

At issue is the Commerce Department's move last month to block the ZTE Corp., a major supplier of telecoms networks and smartphones based in southern China, from importing American components for seven years.

Trump's tweet confirms high level concerns on both sides of the Pacific over the effect the trade ban will have on ZTE and its employees.

Representatives from both the USA and China - which boast the world's largest economies, with nominal GDPs of almost $19.4 trillion and approximately $12 trillion, respectively - held trade talks in early May.

"But be cool, it will all work out!" he wrote.

ZTE was not banned from selling its products in the US, where it is the fourth most popular smartphone brand, but would nonetheless have needed to immediately transform its supply chain to be able to continue to manufacture devices without USA -made parts.

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Commerce Secretary Wilbur Ross last month accused ZTE of misleading the Department of Commerce and warned, "This egregious behavior can not be ignored".

The U.S. ban has additionally been interpreted as a possible salvo in the burgeoning trade war between the Trump administration and China, and through that lens, the action may have given the U.S. leverage in trade negotiations.

In April, he said: "For many years, no president wanted to go against China economically, and we're going to do it".

This would mark a stark reversal of the harsh punishment the Commerce Department handed out to ZTE for its failure to properly dole out its own reprimand to employees involved in selling United States origin equipment to Iran.

ZTE, maker of Android phones popular with budget-minded consumers, said Wednesday that it would cease "major operating activities", raising questions not only about its survival, but the impact on US consumers who have previously bought or were thinking of buying ZTE phones. "China may now have strengthened its desire to get out from a under a scenario where the United States can do that again".

The U.S. government launched an investigation into ZTE after Reuters reported in 2012 the company had signed contracts to ship hardware and software worth millions of dollars to Iran from some of the best known U.S. technology companies. Experts have since said the company could be circling the drain.

Which brings us back to Trump. "You should care more about our national security than Chinese jobs", Schiff said in a tweet directed at Trump. Lumentum Holdings and Acacia Communications Inc. sold key optical equipment.

ZTE confirmed last week that it has essentially shut down in the wake of the ban, pausing production lines and suspending business travel as it seeks legal remedies to get the trade ban overturned. Oclaro, which earned 18 percent of its fiscal 2017 revenue from ZTE, fell 17 percent.

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