Trump vows to help ZTE stay afloat

14/05/2018

Chinese smartphone maker ZTE seemed poised to topple due to American penalties. Now the U.S. president has vowed to work with China to prevent the company’s demise.

Donald Trump caught the world off guard in a Tweet (yet again) announcing that he and President Xi Jinping are working on a solution to save Chinese electronics maker ZTE.

“Too many jobs in China lost,” Trump posted May 13. ZTE employs about 75,000 people worldwide.

The announcement comes less than a week after the smartphone and telecom equipment manufacturer said it was halting its major operations. The U.S. Commerce Department had forbidden American companies for selling it crucial parts it needed to build its smartphones.

ZTE had breached a deal struck last year for violating sanctions on Iran and North Korea, failing to punish employees responsible for circumventing the sanctions, the government said.

The fourth largest provider of smartphones in the U.S., ZTE said last week that it was communicating with U.S. officials to try to mitigate or reverse the ban “and forge a positive outcome in the development of the matters.”

 

 

“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!” Trump tweeted on May 13.

 

 

In his Tweet, Trump said he had instructed the Commerce Department to find a way to allow the company to get back into the business.

Many, including the Commerce Department, seemed unsure of what to make of Trump’s sudden reversal, after weeks of tough talk about China’s unfair trade practices and accusations that the Chinese have robbed American workers of their jobs.

White House spokeswoman Lindsay Walters told the New York Times that she expected that Commerce Secretary Wilbur L. Ross Jr. would “exercise his independent judgment, consistent with applicable laws and regulations, to resolve the regulatory action involving ZTE based on its facts.”

“How about helping some American companies first?” New York Senator Chuck Shumer, a Democrat, tweeted.

Xi Jinping will likely visit Washington this week to try to hammer out negotiations, the New York Times reported. During trade talks last month in Beijing, American officials were not been receptive to China’s objections to the penalties on ZTE.

Later in the day, Trump followed up with another Tweet saying the two countries “are working well together on trade, but past negotiations have been so one sided in favor of China, for so many years, that it is hard for them to make a deal that benefits both countries.”

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

 

 

ZTE is the fourth most popular smartphone brand in the U.S., behind only Apple, Samsung and LG.

 

 

China’s intentions to dominate high-tech industries — outlined in its Made in China 2025 plan — has fueled the U.S. government’s recent tough trade stance, many experts believe. ZTE had plans to become one of the first vendors in the U.S. to offer a smartphone connected to the next-generation 5G wireless network.

The U.S. may have been illustrating a point when it sent the company reeling by denying it microchips and optical components.

Huawei, a larger Chinese telecom equipment maker, is also under fire in the U.S. for violating sanctions against countries including North Korea and Iran. Many are watching the continuing fraught trade talks to see whether or not the U.S. will take a similarly hard stance against Huawei.

Phones made by both Huawei and ZTE are banned from military bases. With ties to the Chinese government, American military and national security advisors believe the technology could pose a security threat if they are tracking users’ location or data.

Despite those concerns, ZTE has become a popular smartphone brand in the U.S., behind only Apple, Samsung and LG. The company says it operates in 160 countries around the world.

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