Donald Trump might rescue one of China’s largest telecommunication companies from dying if he can secure a deal.
ZTE is at the center of a controversy that involves both technology and politics. The U.S. Department of Commerce issued a seven-year ban that prevents any engagement with domestic suppliers. It’s a decision that was made after the Chinese company didn’t adhere to the terms of sanctions from 2017. Aside from paying a massive fine, ZTE was in agreement to fire key employees and discipline others.
While the company did make payments for illegally shipping products to Iran, ZTE didn’t make proper concessions regarding its staff.
The failure to follow the U.S. government’s guidelines means ZTE cannot purchase components from any American company, thus dropping Qualcomm from its supply chain. Even the use of Android is in limbo. With so much reliance on domestic suppliers, ZTE’s business is essentially doomed.
President Trump, however, believes he can cut a deal that will give a second chance to ZTE.
Over the weekend, the President announced that he’s working with President Xi Jinping of China to create a path for ZTE to return to normalcy. Trump admits the punishment severely cripples the Chinese company, and jobs in its native country are being lost. He claims to have instructed the Department of Commerce to figure out a resolution.
The next tweet, which came hours later, talked about how “together on trade” the U.S. and China are making progress in their negotiations. While he’s quick to point out the one-sided nature of the past, Trump feels the two countries can benefit moving forward.
Some members of Congress responded to Trump, including Marco Rubio (R-FL) and Adam Schiff (D-CA) who tweeted this:
It’s a valid concern given that, along with ZTE, companies like Huawei have been accused of spying on behalf of the Chinese government before. Trump thinks the issue is on trade, but almost everyone else from lawmakers to national security experts views ZTE and Huawei as potential vehicles for espionage.
ZTE released a statement upon the supply ban taking effect. As well as feeling the penalty is unfair, the company doesn’t rule out legal action.
Now there’s some belief that the U.S. and China will reach an agreement of their own to ease up on ZTE. The company might not be popular for high-end hardware, but it’s one of the top brands in the U.S. overall. ZTE sells a large number of budget-friendly devices, and it’s actively investing in the deployment of 5G networks around the world.
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