Trump pledges to help China's ZTE ahead of trade talks

WASHINGTON/BEIJING • US President Donald Trump has pledged to help China's ZTE Corp "get back into business, fast" after a US ban crippled the technology company, offering a job-saving concession to Beijing ahead of high-stakes trade talks this week.

Mr Trump's announcement on Sunday was a stunning reversal, given Washington's tough stance on Chinese trade practices that have put the world's two largest economies on course for a possible trade war.

Sources briefed on the matter said Beijing had demanded the ZTE issue be resolved as a prerequisite for broader trade negotiations.

"Too many jobs in China lost. Commerce Department has been instructed to get it done!" Mr Trump wrote on Twitter, saying he and Chinese President Xi Jinping were working together on a solution for ZTE.

The US Commerce Department last month banned American companies from selling to the firm for seven years as punishment for ZTE breaking a 2017 agreement after it was caught illegally shipping US goods to Iran and North Korea, an investigation dating back to the Obama administration.

The penalty cut off ZTE's access to key components such as semiconductors, prompting China's second-largest maker of telecommunications equipment to say last week that it had suspended its main operations.

During trade talks in Beijing earlier this month, Chinese Vice-Premier Liu He told US Treasury Secretary Steven Mnuchin that China would not continue talks on broader bilateral trade disputes unless Washington agreed to ease the crushing sanctions on ZTE, said two people briefed on those meetings.

Chinese Foreign Ministry spokesman Lu Kang told a regularly scheduled news briefing yesterday that China "greatly appreciates the positive US position on the ZTE issue".

He said that Mr Liu would travel to Washington from today to Saturday to continue trade talks.

But Mr Trump's reversal surprised and frustrated many US officials, who had viewed the penalty on ZTE as final and not open to appeal, sources said.

ZTE, the US Commerce Department and China's Ministry of Commerce did not have immediate comment.

White House spokesman Lindsay Walters confirmed that US officials were in contact with Beijing about ZTE.

She said Mr Trump's tweet underscored the importance of "free, fair, balanced and mutually beneficial" relations between the US and China on issues involving the economy, trade and investment.

She said Mr Trump expected Commerce Secretary Wilbur Ross to exercise his independent judgment to resolve the regulatory action involving ZTE based on its facts.

In a second tweet on Sunday, Mr Trump said past US trade talks with China posed a hurdle that he predicted the two countries would overcome.

Washington and Beijing have proposed tens of billions of dollars in tariffs in recent weeks, fanning worries of a full-blown trade war that could hurt global supply chains and dent business investment plans.

REUTERS

A version of this article appeared in the print edition of The Straits Times on May 15, 2018, with the headline 'Trump pledges to help China's ZTE ahead of trade talks'. Print Edition | Subscribe