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

Update: New bill amendment upholds ZTE's supply ban and could prevent any interference from the White House.

Published onMay 18, 2018

Update (05/18): Trump’s apparent plan to help bail out ZTE may have fallen at the first hurdle. The House Appropriations Committee has approved an amendment to the Fiscal Year 2019 Commerce, Justice and Science Appropriations Bill that upholds sanctions against the Chinese OEM and will almost certainly prevent any interference from the White House.

“This amendment, which passed with the unanimous support of my colleagues on both sides of the aisle, shows that, when the United States enacts sanctions, we stand behind them,” said the amendment’s author, Rep. Dutch Ruppersberger (via 9to5Google).

“It will also prevent a foreign company that is beholden to its government – and that ignores embargoes – from infiltrating the devices and networks that are now indispensable to American life.”

The news will come as yet another major blow to ZTE. The Shenzhen-based firm had reportedly been gearing up to resume normal operations within two-to-three weeks following Trump’s show of support. With such a powerful ally effectively silenced, ZTE may need to once again consider its options as it faces the reality of a seven-year ban on the use of U.S. technology.

Original story (05/13): A few days ago, things were looking bleak for China’s smartphone company ZTE. The company admitted earlier this week that it had ended its “major” business operations, due to a hardware supply ban placed on it by the U.S.

Now, it looks like ZTE found an unexpected, and very powerful, ally: President Donald J. Trump,

In a Twitter post today, President Trump stated he was working with China’s president Xi Jinping to help give ZTE “a way to get back into business, fast.” He added that he felt that too many jobs in China had been lost, and that he has instructed the U.S. Commerce Department “to get it done!”

ZTE has 75,000 employees in China.

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

This post, like many from President Trump, came out of left field, especially since the U.S. government has been highly critical of ZTE’s business practices in the past. In 2012, it was discovered that ZTE shipped smartphones to Iran. However, the company’s phones used hardware and software from the US, which had a trade embargo with Iran.

ZTE agreed to be fined for this violation in 2017, and also agreed to dismiss four of its senior employees, and discipline 35 other staff. However, earlier this year the Commerce Department claimed ZTE had not yet disciplined the 35 other employees, so it put a seven-year ban on the company, preventing it from using any hardware or software products based in the US.

ZTE calls ban “unfair,” but what can it do now?

ZTE has since stated the U.S. ban was “unfair” and planned to appeal the decision. This new message from President Trump may be the company’s only real hope of staying alive. It’s possible Trump may be using ZTE’s situation as a bargaining chip with China so he can negotiate a new trade deal with the country.

However, other parts of the U.S. government, especially its intelligence agencies, have other issues with ZTE. They feel the company’s phones, along with phones made by Huawei, are a major cybersecurity threat. U.S. intelligence assesses that both companies could use their phones to spy remotely for the Chinese government (both ZTE and HUAWEI have denied these claims in the past).

After President’s Trump’s tweet today, U.S. House of Representatives member Adam Schiff, the ranking member of the US House Intelligence Committee, wrote his own Twitter post that pointed out these concerns, claiming that Trump should “care more about our national security than Chinese jobs”.

Our intelligence agencies have warned that ZTE technology and phones pose a major cyber security threat. You should care more about our national security than Chinese jobs.
— Adam Schiff (@RepAdamSchiff) May 13, 2018

It would appear that the situation surrounding ZTE just got a lot more interesting, and its likely to take some more twists and turns before it is all over.

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