Published: Mon, May 14, 2018
Finance | By Marshall Campbell

Trump seeks to save Chinese jobs at ZTE ahead of trade talks

Trump seeks to save Chinese jobs at ZTE ahead of trade talks

President Donald Trump said Sunday he has instructed his Commerce Department to help get a Chinese telecommunications company "back into business" after the United States government cut off access to its American suppliers.

"If ZTE is truly considering selling its mobile handset business, then the potential end for the company is near", Earl Lum, the President of EJL Wireless Research, a consultancy and research firm based in the U.S., said. "Commerce Department has been instructed to get it done!"

President Donald Trump pledged on Sunday to help Chinese phone manufacturer ZTE return to business, days after the company said it would cease "major operating activities" because of the US government's recent trade restrictions.

ZTE said it is working with the Trump administration to reverse the sanctions and "forge a positive outcome in the development of the matters".

Trump's reversal could have a significant impact on shares of American optical components makers such as Acacia Communications and Oclaro which saw their stock prices fall when US companies were banned from exporting goods to ZTE. While a stock exchange filing from the firm revealed it ceased its main operations following the sanction earlier this week, an unnamed official from the manufacturer told CNET that doing so "does not mean we're going away".

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The ban is the result of ZTE's failure to comply with an agreement with the USA government after it pleaded guilty past year to conspiring to violate US sanctions by illegally shipping US goods and technology to Iran. The person reiterated ZTE's recent point about its cash reserves which allow it to stay afloat over the troubled period, though it's still unclear how large those holdings actually are, i.e. how much time could they buy.

During a meeting with seven high-level members of the Trump administration last week in Beijing, Chinese officials reportedly brought up the ZTE crackdown and urged the USA to ease up.

In April, the Commerce Department penalized ZTE for violating a settlement with the US government over illegal shipments to Iran and North Korea. Later, he slapped tariffs on $50 billion worth of Chinese goods. A ZTE spokesman also did not respond to an email seeking comment. More recently, reports have suggested that the Trump administration is considering various ways to limit Chinese firms' ability to invest in the US.

The trade troubles threaten a technology sector that is increasingly intertwined with major players in the United States and China.

For instance, MTN, a South Africa-based wireless carrier with 220 million customers throughout Africa and the Middle East, said the possibility ZTE would collapse forced the carrier to develop contingency plans.

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