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Illustration: Lazaro Gamio/Axios

China's ZTE is alive, escaping what once looked like a death sentence for repeatedly violating U.S. sanctions and being seen as a threat to national security.

The details: The deal requires a $1 billion fine for ZTE, plus $400 million in escrow to cover any future violations. ZTE will also have to "retain a team of special compliance coordinators" who answer to the U.S., and change its top leadership.

The big picture: Trump's broad tariffs against Chinese goods concern Beijing, but the Commerce Department going after ZTE — a state-owned enterprise in a strategic sector — hit a sore spot for the Communist Party.

  • P.S. "[ZTE's] fate has gotten caught up in a bigger web, including an upcoming summit between President Trump and North Korea’s leader and the success of an American telecom company, Qualcomm, which sells a large amount of semiconductors to ZTE and is awaiting Chinese approval of a deal to acquire a Dutch telecom firm that will help it build the next generation of wireless technology, known as 5G." [N.Y. Times]

Why it matters: China's successful negotiation to save the company could embolden it to try the same for Huawei.

  • Huawei has been banned from military bases due to national security concerns about espionage. It's back in the headlines this week after it was revealed Huawei accessed Americans' data via Facebook. [Go deeper on Huawei]

What they're saying:

  • Marco Rubio: "I assure you with 100% confidence that #ZTE is a much greater national security threat than steel from Argentina or Europe."
  • Chuck Schumer: "@realDonaldTrump should be aiming his trade fire at China, but instead he inexplicably aims it at allies like Canada, Mexico and Europe."
  • Sen. John Kennedy: "I’m sure ZTE makes a fine cell phone, but they’re a little too close to the Communist Party of China for my tastes."
  • Go deeper: The bipartisan blowback

What's next: A bipartisan hoard of senators have introduced legislationto reverse the ZTE deal.

Be smart: China has the leverage to take on the U.S., and it's smart enough to use it when it matters — as was the case with ZTE.

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Go deeper

Dems race to address, preempt stimulus fraud claims

Illustration: Aïda Amer/Axios

Biden officials are working to root out the systematic fraud in unemployment and Paycheck Protection Program claims that plagued the Trump administration’s efforts to boost the economy with coronavirus relief money, Gene Sperling told House committee chairmen privately this week.

Why it matters: President Biden just signed another $1.9 trillion of aid into law, with Sperling tapped to oversee its implementation. And the administration is asking Congress to approve another $2.2 trillion for the first phase of an infrastructure package.

1 hour ago - Politics & Policy

Scoop: Biden close to picking Nick Burns as China ambassador

Nicholas Burns. Photo: Alex Wong/Getty Images

Nicholas Burns, a career diplomat, is in the final stages of vetting to serve as President Biden’s ambassador to China, people familiar with the matter tell Axios.

Why it matters: Across the administration, there's a consensus the U.S. relationship with China will be the most critical — and consequential — of Biden's presidency. From trade to Taiwan, the stakes are high. Burns could be among the first batch of diplomatic nominees announced in the coming weeks.

Biden's Russian sanctions likely to achieve little

President Biden announces new sanctions against Russia. Photo: Chip Somodevilla/Getty Images

Despite bold talk from top administration officials, there's little reason to think the Russia sanctions package President Biden announced Thursday will do anything to alter Russian President Vladimir Putin's behavior or calculus.

Why it matters: While it's true some elements of the package — namely, the targeting of Russia's sovereign debt — represent significant punitive measures against Moscow, it leaves plenty of wiggle room for the Russian president.