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Trump vows to help ZTE get back into business

Sheetal Sukhija - Monday 14th May, 2018

WASHINGTON, U.S. - Days after China’s second largest telecom gear maker ZTE Corp. was slapped with intense U.S. sanctions that block American companies from selling components to the telecom equipment maker for seven years, now the U.S. President Donald Trump has had a change of heart.

The company recently said that it would cease “major operating activities” because of the U.S. government’s recent trade restrictions.

In response to the sanctions, Trump has now pledged to help the Chinese phonemaker “get back into business.”

Trump’s dramatic shift in tone came despite his repeated accusations against China, which the U.S. President has said is stealing U.S. jobs.

Trump tweeted on Sunday, “President Xi of China, and I, are working together to give massive Chinese phone company, ZTE, a way to get back into business, fast. Too many jobs in China lost. Commerce Department has been instructed to get it done!”

The U.S. President’s offer comes as a reversal of one of the Trump administration’s toughest actions to date against a Chinese company. 

ZTE recently submitted a request for the U.S. Commerce Department to put the order forbidding American firms from selling parts and providing services to it, on hold.

The Chinese company sells smartphones and telecommunications equipment around the world and was slapped with the seven-year export ban because the Chinese company lied to American officials about punishing employees who violated U.S. sanctions on North Korea and Iran.

However, the crackdown has been widely interpreted as part of a broader push by the United States to stifle China's tech ambitions.

Last week, the company said that its earnings have surged, reporting a 39 percent jump in net income for the first quarter.

At the time, the company said it was still assessing the impact of being placed on the Commerce Department’s blacklist.

ZTE was the latest to feel the pain of the world’s two largest economies being locked in a looming global trade war, which is likely to stifle trade across the world.

The possible trade war is also said to disrupt investment in technology.

The recent ban faced by ZTE was the second time it ran afoul of Washington in a year.

The company incited a seven-year moratorium on purchases from U.S. suppliers for violating a 2017 sanctions settlement and then lying about it.

ZTE is now facing sanctions at a time when all major wireless carriers prepare to roll out 5G networks worldwide.

Trump’s statement on Sunday also comes days after U.S. and Chinese officials held high level trade talks, during which Beijing specifically brought up the restrictions on ZTE. 

At the time, in an official statement the Chinese government said it lodged "solemn representations" with the United States over the ban.

Meanwhile, ZTE, which relies on U.S. firms for key smartphone components, including microchips from Qualcomm and glass from Corning, has said the U.S. export ban is a massive disruption to its business and ZTE Chairman Yin Yimin called it unfair and unacceptable.

On Sunday, a while after Trump's tweet, Rep. Adam Schiff (D-Calif.) said, "Our intelligence agencies have warned that ZTE technology and phones pose a major cybersecurity threat. You should care more about our national security than Chinese jobs."

Despite the offer to help ZTE, trade tensions between the U.S. and China remain sky high. 

The U.S. President has proposed tariffs on as much as $60 billion in Chinese goods, generating a similar response from Beijing.

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