Ongoing negotiations between the United States and China on trade have been positive, and it could lead to ZTE remaining in business with its sales ban lifted. Both countries have reportedly reached a broader deal that would let the Chinese company continue purchasing from American suppliers. Nothing is official yet, but it’s the type of news ZTE desperately needed to hear.
The trade dispute, according to the Wall Street Journal, still needs the finer details set in place before anything takes effect.
ZTE put itself in a dire situation when the U.S. Department of Commerce issued a seven-year ban for illegally shipping products to Iran and North Korea. The sales ban would essentially kill the company as it relies heavily on American suppliers.
While purchasing chips from Qualcomm was certainly out of the question following the announcement, even the use of Android was put in jeopardy. ZTE could find workarounds, but it’s hard to imagine the business would be sustainable without common hardware and software components. Then the U.S. President got involved, which offered some hope.
Earlier this month, Donald Trump tweeted that he and President Xi Jinping of China were working together to restore ZTE’s operations. Trump, however, talked more about trade than national security. Companies like ZTE and Huawei have been under scrutiny for possibly spying on behalf of the Chinese government.
Now there might be a deal struck between the U.S. and China that benefits the telecommunications giant. ZTE, though, wouldn’t be able to continue as if none of this ever happened.
The report suggests ZTE will be asked to overhaul its management team, reassign board seats, and pay fines to the U.S. government. ZTE originally faced these punishments, but it never followed through. Since the U.S. is serious after issuing a sales ban, ZTE will likely stick to the sanctions.
Negotiations between the U.S. and China could, of course, fall apart despite the two sides making significant progress. On China’s side, tariffs placed on farm products could be dropped.
The U.S., meanwhile, would like to see Chinese companies purchase more products from American companies. For years it’s been American companies doing most of the buying.