Trump vows to save ZTE, protect Chinese manufacturing jobs after crippling US sanctions

‘Too many jobs lost in China,’ the president tweeted about the Chinese phone maker facing financial ruin following a US ban

Shanghaiist.com
May 14, 2018 · 3 min read

US President Donald Trump has publicly stepped forward, vowing to save one company from financial ruin — a Chinese company.

ZTE, one of China’s biggest phone-makers, was forced recently to suspend its main operations after being hit last month with a crippling ban from the US Commerce Department which forbids American companies from selling to ZTE for the next seven years.

This ban came as a truly massive blow to ZTE. As much as 30% of the components used to make its phones and other equipment are estimated to come from the US. Unable to make any new products without American imports, the company ran out of inventory.

The near death sentence was put in place after ZTE was found to have broken an agreement reached last year with the US after it was caught illegally shipping millions of dollars of American hardware and software to Iran, violating sanctions. At the time, the company was also discovered to have lied to investigators and to have tried to obstruct the probe into its unlawful actions. The settlement saw ZTE pay an “unprecedented” fine of $1.2 billion.

However, rather than reprimanding the staff and senior management involved in these Iran deals, ZTE was found recently to have paid full bonuses to them. “This egregious behavior cannot be ignored,” US Secretary of Commerce Wilbur Ross wrote in a statement announcing the ban last month.

With US-China trade negotiations heating up once again, the sudden collapse of a company as large and important as ZTE has become an issue of critical significance to China. While many observers had applauded the Trump administration for taking a hard line on ZTE, after talking with his best buddy Xi, Trump now appears ready to reverse course:

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

Considering Trump’s “America First” persona and his fiery rhetoric against Iran and those who do business with the country, the tweet has been met with shock and ridicule online with a number of important voices criticizing the president for his hypocrisy and for not having his priorities straight.

As many have been quick to point out, along with violating the Iran sanctions and its own agreement with the US, American intelligence agencies have been unanimous in their concern that ZTE may also be using its technology and phones in order to spy on US consumers, posing a serious cyber security threat to the country. Last month, the Pentagon banned retailers on US military bases from selling ZTE phones.

Two inside sources told Politico that the reason why Trump made the tweet is that he is trying to strengthen his own relationship with Xi ahead of next month’s historic summit with Kim Jong Un in Singapore.

Additionally, Chinese trade negotiators are set to arrive in Washington later this week as the Trump administration continues its push to reduce the US trade deficit with China — which was $337 billion last year.

About five hours after tweeting his support for ZTE, Trump tweeted again, arguing that because previous trade deals with Beijing had been “so one sided in favor of China,” it was now difficult to strike a deal that was beneficial to both countries.

“But be cool, it will all work out!”

Trump has at least received praise for his ZTE tweet from nationalistic Chinese tabloid the Global Times, which published an editorial earlier today arguing that ZTE was being unfairly punished by the US because of the ongoing trade disputes.

“ Many Chinese saw ZTE’s ordeal as the result of evil wrongdoing carried out by the US as was the speculation among international businesses,” the tabloid claims.

“ Economic and trade partners should not have to feel a deep sense of unease when working with the US. We expect President Trump to follow through with his Twitter announcement quickly, and it shouldn’t be just another card in the game. The situation with ZTE is about credibility and nothing more.”

Shanghaiist

China in bite-sized portions

Shanghaiist.com

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China in bite-sized portions.

Shanghaiist

China in bite-sized portions

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