Donald Trump ‘working together’ with President Xi Jinping to help restart China's ZTE

The US president instructed the Commerce Department to help the Chinese telecom giant ‘get back into business, fast’

PUBLISHED : Monday, 14 May, 2018, 12:27am
UPDATED : Monday, 14 May, 2018, 12:40pm

US President Donald Trump said on Sunday that he has asked the Commerce Department to help Chinese technology company ZTE Corp “get back into business, fast,” after being crippled by a US ban, a concession to Beijing ahead of high-stakes trade talks this week.

“Too many jobs in China lost. Commerce Department has been instructed to get it done!” Trump wrote on Twitter, saying he is working with Chinese President Xi Jinping on a solution.

White House spokeswoman Lindsay Walters confirmed that US officials are in contact with Beijing about ZTE. She said Trump’s tweet underscored the importance of “free, fair, balanced and mutually beneficial” relations between the United States and China on issues involving the economy, trade and investment.

Trump expects Commerce Secretary Wilbur Ross “to exercise his independent judgement, consistent with applicable laws and regulations, to resolve the regulatory action involving ZTE based on its facts,” Walters said. 

ZTE has noticed the tweet from Trump and welcomes this latest progress, a person close to the company told the South China Morning Post. ZTE will continue to communicate with relevant parties, under the guidance of the Chinese government, to facilitate a final resolution, said the person, who is not authorized to speak to the media. 

Trump’s offer to help comes as Chinese and US 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 says US plays ‘nice’ in China trade talks due to ‘respect’ for Xi

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 could 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 crushing sanctions on ZTE, according to people with knowledge of the matter.

In a second tweet on Sunday, Trump said past US trade talks with China posed a hurdle that he predicted the two countries would overcome.

“China and the United States are working well together on trade, but past negotiations have been so one sided in favour of China, for so many years, that it is hard for them to make a deal that benefits both countries,” Trump wrote on Twitter.

“But be cool, it will all work out!” he added.

Shortly after Trump’s first tweet on the matter, a Democratic lawmaker questioned the move to help the Chinese company, given numerous warnings about ZTE’s alleged threat to US national security.

“Our intelligence agencies have warned that ZTE technology and phones pose a major cyber security threat,” Representative Adam Schiff, a Democrat, said on Twitter. “You should care more about our national security than Chinese jobs.”

ZTE, one of the world’s largest telecom equipment makers, suspended its main operations earlier this month after the US Commerce Department banned American supplies to its business. 

ZTE pleaded guilty last year to conspiring to violate US sanctions by illegally shipping US goods and technology to Iran and entered into an agreement with the US government. 

The ban is the result of ZTE’s failure to comply with that agreement, the Commerce Department said.

ZTE ceases ‘major operations’ because of US ban on tech sales

The ban also came two months after two Republican senators introduced legislation to block the US government from buying or leasing telecommunications equipment from ZTE or Huawei, citing concern the companies would use their access to spy on US officials. 

“This is a fascinating development in a highly unusual case that has gone from a sanctions and export control case to a geopolitical one,“ said Washington lawyer Douglas Jacobson, who represents some of ZTE’s suppliers.

“There’s no legal mechanism for this. How this will play out remains to be seen. They are not simply going to be able to resume business as usual,” he said.

Without specifying companies or countries, Federal Communications Commission Chairman Ajit Pai, recently said “hidden ‘backdoors’ to our networks in routers, switches, and other network equipment can allow hostile foreign powers to inject viruses and other malware, steal Americans’ private data, spy on US businesses, and more.” 

ZTE suspends smartphone sales to comply with US ban

Trump’s reversal will likely have a significant impact on ZTE’s US suppliers such as Qualcomm Inc and Intel Corp. 

ZTE relies on US companies such as Qualcomm Inc, Intel Corp and Alphabet Inc’s Google. American companies are estimated to provide 25 per cent to 30 per cent of the components used in the phone maker’s equipment, which includes smartphones and gear to build telecommunications networks.

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