May 13, 2018 - World

Trump and Xi working on plan to save Chinese phone maker ZTE

After two years of assailing his predecessors for putting Chinese workers before Americans, President Trump today said he is directing his administration to reverse the effective shutdown of ZTE in order to save Chinese jobs.

The big picture: The Commerce Department banned American companies from selling parts to ZTE for seven years because the Chinese company violated U.S. sanctions by selling equipment made with American parts to Iran and North Korea. As a result of the sanctions, ZTE halted operations last week. Now, Trump says he's working with Chinese President Xi Jinping to save the Chinese phone maker.

Yes, but: Trump's move to help ZTE — an Iran sanctions violator — comes as his administration is contemplating sanctioning European companies that do business with Iran. National Security Adviser John Bolton told CNN's Jake Tapper Sunday that action against U.S. allies is "possible."

Be smart, via Axios contributor Bill Bishop:

  • A reprieve for ZTE is clearly a U.S. concession, and we do not yet know what Trump got in return. The ZTE episode has only reinforced China’s fears about its excessive reliance on U.S. technology and its determination to accelerate efforts to achieve indigenous technology independence.
  • Trump’s willingness to accede to Xi’s request for leniency towards ZTE — a firm caught repeatedly violating U.S. law — may also signal an increased likelihood of a U.S.–China deal to diffuse the current trade tensions, but expect this to be only a brief ceasefire in the growing Sino–U.S. tech rivalry

Go deeper: ZTE sanctions might strengthen Chinese tech

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