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Financial Times / Biz - Money

Trump defends his intervention over China’s ZTE

US President Donald Trump on Monday sought to defend his unusual intervention in a sanctions violation case against China’s ZTE, after bipartisan criticism of the move in Washington. 

“ZTE, the large Chinese phone company, buys a big percentage of individual parts from US companies,” the president tweeted, after a day of mounting controversy. “This is also reflective of the larger trade deal we are negotiating with China and my personal relationship with President Xi.” 

His comments came ahead of the anticipated arrival on Tuesday in Washington of Xi Jinping's top economic adviser, Liu He, for trade negotiations. China has insisted the US commerce department lift a seven-year ban imposed last month on ZTE sourcing parts from the US. 

People briefed on preparatory discussions for Mr Liu’s trip to Washington said Chinese officials have made resolving the ZTE case a priority and insisted on some sort of progress before any new talks can be held.

According to one person briefed on the negotiations, the ZTE move also appeared to be part of a broader bargain under which China would drop its plan to impose tariffs on US agricultural exports. Those retaliatory tariffs were announced by Beijing in response to Mr Trump’s threat to impose duties on almost $50bn of imports over China’s alleged systematic theft of US companies’ intellectual property. 

Last year, ZTE pleaded guilty to criminal charges of violating US sanctions against North Korea and Iran, and agreed to pay up to $1.2bn in fines. The ban on US companies supplying parts to ZTE was imposed last month when US investigators said ZTE had breached the terms of its plea deal.

The ban forced ZTE, which has also long been the target of concern for US national security authorities, to suspend operations last week.

Mr Trump on Sunday took the unusual step of intervening in the case, declaring on Twitter that he and Mr Xi were working to get ZTE back into business because its shuttering meant “too many jobs in China lost”. 

Both Republicans and Democrats seized on that comment to accuse Mr Trump of siding with a Chinese firm that has concerned intelligence agencies for years. In February, the heads of the CIA, FBI and NSA told a congressional committee that they would not recommend US citizens using any ZTE phones or other equipment, warning it could give China a backdoor into the US telecoms network. 

“The President of the United States is fighting to protect jobs in China at a company that may be spying on Americans — and has been sanctioned by our government. This is not normal, and I will be demanding answers,” Democratic senator Chris Van Hollen said on Monday. 


  • Earlier: ZTE reprieve paves way for next round of US-China trade talks

“I hope this isn’t the beginning of backing down to China,” Republican Marco Rubio said in a series of tweets. “Problem with ZTE isn’t jobs & trade, it’s national security & espionage . . . We are crazy to allow them to operate in US without tighter restrictions.” 

Wilbur Ross, the US commerce secretary responsible for imposing the ban on ZTE using US parts, said on Monday that he was examining alternative penalties at the president’s request. 

But he insisted that “ZTE did do some inappropriate things” and indicated that the Chinese company would still have to face a penalty. 

Original Source