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Trump support brings ZTE a step closer to resuming normal operations

ZTE may resume normal operations within weeks following its the U.S. trade ban last month. And it might have the president to thank.

Published onMay 15, 2018

  • A new report suggests ZTE may resume normal business operations in the coming weeks after the company was crippled by a recent trade ban.
  • The report suggests President Trump’s surprise backing has played a role in the turnaround.
  • China’s important role in upcoming agreements may also influence future U.S. decisions regarding ZTE.

ZTE may return to normal operations within the coming weeks following the seven-year export ban it received last month. ZTE, which is based in Shenzhen, announced last week that it had been forced to suspend major operations as a result of the ban, but President Trump has since said he is supporting the company’s recovery.

The U.S. banned exports to ZTE in April for its violation of a U.S. Iranian trade embargo. This had a significant impact on the company, said to be the fourth largest smartphone vendor in the U.S. before the ban, as it relies heavily on supplies from U.S. corporations such as Qualcomm and Intel.

How screwed is ZTE right now?

This move is believed to not only affect ZTE, with its estimated 80,000 worldwide staff members, but other state-controlled Chinese companies like its three major carriers.

Thanks to Trump’s surprising weekend tweet, and continued U.S. support, the South China Morning Post reported that the company could resume normal operations within “two-to-three weeks.” This speculation is, however, based on one possible outcome, and the U.S. Department of Commerce’s future decisions on the matter may not lead to such a rapid turnaround for ZTE.

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!
— Donald J. Trump (@realDonaldTrump) May 13, 2018

Trump has since defended his comments regarding ZTE after coming under fire from Republican and Democrat parties. According to the South China Morning Post, Trump said:

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

Trump’s actions may also be related to Qualcomm’s potential $44 billion acquisition of Dutch firm NXP Semiconductors. As the world’s largest importer of semiconductors, China has a say in the deal, which would be lucrative for electronics giant Qualcomm. Chinese authorities have apparently urged the Chinese Ministry of Commerce to restart their review of the acquisition in light of the show of good faith from the U.S..

Trump working with China to get ZTE "back in business" (Updated)

Additionally, The Wall Street Journal (paywall)‘s sources point to another possible result of U.S. leniency towards ZTE. China may “agree to hold back tariffs on a variety of U.S. agricultural products it announced in early April as retaliation for U.S. tariffs on Chinese steel and aluminum exports,” The Wall Street Journal wrote. The agricultural products are said to be worth billions of dollars to the US.

Chinese Vice Premier Liu Yandong is said to be visiting Washington from today until the end of the week to discuss the matters.

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