United States President Donald Trump has signalled an intervention to avoid job losses at Chinese networking-kit-and-smartmobe-maker ZTE.
The US Department of Commerce recently imposed penalties on ZTE after finding it sold kit to Iran and North Korean in contravention of US sanctions and undertakings not to do so. Those penalties prevented American companies selling to the Chinese concern, which is a bit of a show-stopper as ZTE is reliant on US companies for all manner of parts – Qualcomm for smartphone CPUs is the tip of the iceberg.
The impact of the sanctions was swift and nasty: a shutdown of ZTE’s assembly lines and the possible loss of hundreds of thousands of jobs at the Chinese company.
If that were to happen it would hardly be good for US companies either, given ZTE has revenues of $17bn and output of around 50 million smartphones a year.
Enter Trump to the rescue, with the following trademark policy-as-tweet.
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 campaigned on restoring manufacturing jobs in the USA, not China. But the Tweet’s not as odd as it appears in the context of recent US-China trade negotiations. The USA believes China ignores international trade rules and is trying to rein in the middle kingdom. A deal to keep ZTE afloat could be a useful bargaining chip in those wider negotiations, while also satisfying US companies deprived of ZTE’s business by the Department of Commerce’s ruling.
ZTE has, in any case, indicated it will appeal and believes it will be cleared. Even if it is cleared, the company will struggle to sell its products in the USA as it has been declared too risky for government purchases. ZTE also faces new allegations of bribery in Australia, reported by the Financial Review. ®