United States reaches deal with China to keep ZTE in business

Trump Administration Plans to Revive ZTE, Prompting Backlash

In a tweet Friday evening, Trump confirmed a deal that his administration had outlined for members of Congress, according to two people familiar with the matter.

Headquartered in Shenzhen, China, ZTE was handed a seven-year ban on buying USA technology components in mid-April. It's not clear how the company will be forced to "purchase United States parts and pay a $1.3 Billion fine", nor what sort of oversight would be in place to ensure ZTE continued to comply with the conditions. A bill that would prevent the Department of Commerce to walk back the ZTE sanctions could still stop the deal in its tracks.

His treatment of ZTE has been different, though, as he has used the prospect of helping the company as a carrot to lure Chinese leaders into broader discussions about trade. The U.S. and China are engaged in high-stakes talks on steel trade and intellectual property rights under the looming threat of punitive tariffs. USA -traded shares of NXP Semiconductors NV rose 4.7 percent after the announcement, as signs of better U.S.

A representative for ZTE declined to respond in a text message. China's technological edge is in e-commerce, the internet, mobile payment systems and big data, while areas like chip design and fabrication, and the development of operating systems appear to be key weaknesses. The restriction was imposed after the company allegedly violated sanctions the US government has in place on Iran and North Korea. The White House could be forced to fight to have this provision stripped out if they want to consummate their deal with the Chinese.

Senator Marco Rubio (R-Florida) has likewise criticized the Chinese company as a security hazard. "It is a great deal. for #ZTE & China", GOP Sen.

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The House voted to punish China's ZTE Corp. as part of an annual defense policy bill, as Congress pressures President Donald Trump not to weaken sanctions on the telecommunications equipment maker accused of violating trade-sanction agreements and posing a threat to US national security.

It's unclear if Congress will be able to muster veto-proof majorities needed to block the president on ZTE. United States Secretary of the Treasury Steven Mnuchin attempted to assure Congress that administration has not forsaken American security. Trump has said the new fine against ZTE could be about $1.3 billion. "Having somebody inside the company to observe what's going on would be very valuable". It remains to be seen whether the Chinese government will agree to this demand, considering the sensitive nature of ZTE's business dealings. The Commerce Department decision would allow it to resume business with US companies, including Qualcomm Inc, the chipmaker that is a ZTE supplier. That led to the seven-year ban.

Commerce Secretary Wilbur Ross is scheduled to travel to Beijing on June 2 for further discussions over China's aggressive push to challenge U.S. technological dominance. -China trade stand-off - but Trump said today that its new life comes at a cost.

The announcement was met with criticism from both sides of Congress.

Trump on Tuesday floated a plan to fine ZTE up to $1.3 billion and shake up its management as his administration considered rolling back more severe penalties that have crippled the company.

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