Inside the White House with D.C.'s most wired reporter. Sign up for Mike Allen's Axios AM.


The U.S. ban on China's ZTE has been lifted

Figures silhouetted in front of the ZTE logo
A ZTE presentation at a conference in Barcelona. Photo: Miquel Benitez/Getty Images

After three months and the effective shutdown of phone maker ZTE, the Commerce Department has officially lifted a ban on American suppliers selling to the Chinese company, reports Reuters, and ZTE shares are soaring.

Why it matters: The fact that a ban on American parts prompted ZTE to shut down operations is a clear example of the significant leverage U.S. tech companies have over China. But Chinese President Xi Jinping was able to successfully lobby President Trump and save ZTE. That sets a dangerous precedent for U.S.–China negotiations on trade and intellectual property theft.

The backdrop: ZTE is a repeat violator of U.S. sanctions — it sold equipment with American parts to North Korea and Iran, and has been labeled a national security threat by the Pentagon. As a result, ZTE phones have been banned from military bases due to concerns about Chinese espionage.

  • The details: The Chinese phone maker held up its end of the Commerce Department's deal, paying a $1 billion fine for violating U.S. sanctions and placing $400 million in a U.S. bank escrow account. The company has also made changes to its top leadership. As a result, Commerce lifted what would have been a seven-year ban on American companies doing business with ZTE.
  • What to watch: U.S. lawmakers are refuting the Trump administration's move and working to reinstate the ban by including it in defense legislation.

Go deeper:

More stories loading.