In concession, Trump will help China's ZTE 'get back into business'

In concession, Trump will help China's ZTE 'get back into business'

Now, Trump says he's working with President Xi Jinping of China to get the company back on its feet.

Trump campaigned on restoring manufacturing jobs in the US, not China.

The commerce department barred ZTE from purchasing components in the U.S. for seven years after it was caught violating the terms of a $1.2bn settlement agreed last year in which ZTE admitted illegally selling equipment that included sensitive USA parts to Iran and North Korea.

The announcement followed a decision last month by the U.S. Commerce Department, which banned American companies from exporting products to the Shenzhen, China-based telecom firm for seven years.

Given that US sanctions were imposed on ZTE due to threats to national security and its violation of trade sanctions with Iran and North Korea, Trump's desire to give the company another chance in the U.S.is truly unexpected.

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As one of the world's largest telecom equipment makers, ZTE relied on USA companies for components.

American technology companies are estimated to provide 25-30 percent of the components used in ZTE's equipment, which includes smartphones and gear to build telecommunications networks for telecom operators globally.

The prospective shutdown of ZTE has been seen as major leverage in continuing trade discussions between China and the United States over Chinese trade practices.

"But be cool, it will all work out!" he added.

USA military exchanges also have stopped selling smartphones made by ZTE and Huawei Technologies after the Pentagon warned that the devices pose a security risk to military personnel and operations, the defence department said earlier this month.

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Commerce Secretary Wilbur Ross last month accused ZTE of misleading the Department of Commerce and warned, "This egregious behavior can not be ignored". Reuters notes that U.S. suppliers like Intel and Qualcomm will likely suffer "a significant impact" from the Commerce Department ban. In this case, ZTE's infringements are so major - trade violations and national security concerns - that it is hard to envisage the company getting a pass, even with support from the White House.

Experts said Trump's policy reversal was unprecedented.

The US government launched an investigation into ZTE after Reuters reported in 2012 the company had signed contracts to ship millions of dollars' worth of hardware and software from some of the best known US technology companies to Iran.

Which brings us back to Trump.

Shares of ZTE suppliers including Acacia, Oclaro, Lumentum Holdings Inc, Finisar Corp, Inphi Corp and Fabrinet fell sharply after the ban was announced. The company has already been pushing for a solution that could limit or reverse the export ban, but this doesn't guarantee that officials can give ZTE the reprieve it wants.

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