President Donald Trump’s tweet Sunday suggesting that he would help a Chinese company crippled by the U.S. Department of Commerce for serious sanctions violations get back on its feet was met with cheers in China.
“President Xi of China, and I, are working together to give massive Chinese phone company, ZTE, a way to get back into business, fast,” the president tweeted Sunday. “Too many jobs in China lost. Commerce Department has been instructed to get it done!” (RELATED: Trump Says He’s Working With Beijing To Get A Troublesome Chinese Company ‘Back Into Business’)
“Wow! Breaking good news!” a Zhongxing Telecommunications Equipment (ZTE) manager reportedly posted on WeChat, with other employees excitedly cheering Trump’s surprising tweet, according to Reuters. ZTE management is said to have responded very positively to the news, which intends to negotiate with the U.S. with guidance of the Chinese government. Chinese telecom stocks surged with the news. “We highly appreciate these positive remarks on the ZTE issue,” a Chinese Ministry of Foreign Affairs spokesman said Monday, adding, “We are currently in close communication with them on how exactly to implement it.”
Employees who spoke to reporters expressed optimism as well as concerns about potential layoffs if the company faces another fine.
ZTE is one of two prominent Chinese telecom companies, with the other being Huawei, that sells equipment for cellular networks. With more than 75,000 employees, ZTE does business in over 160 countries. The issue that brought ZTE to the attention of the Department of Commerce is that ZTE was selling products equipped with American technology to countries targeted by sanctions and U.S. export restrictions, such as North Korea and Iran.
ZTE was fined $1.19 billion and pleaded guilty in federal court to sanctions violations in March 2017, one year after the Commerce Department presented evidence of ZTE’s failure to abide by U.S. export control and compliance laws. ZTE was also required to punish senior leaders as part of the settlement agreement.
The U.S. government claims that not only did ZTE make false statements during and after the settlement negotiations, but the company also failed to punish senior executives, paying them bonuses instead. The Department of Commerce imposed a seven-year ban on component sales to ZTE in April, threatening the company’s survival.
The Shenzhen-based company, which has asked the U.S. government to review its case, arguing the issue was a simple human resources error that has since been corrected, reportedly halted all major operations last week.
Further complicating the situation for ZTE, the fourth-largest phone vendor in the U.S., are intelligence agency warnings that allowing Chinese telecommunications companies unfettered access to American networks constitutes a major national security risk. “We are crazy to allow them to operate in U.S. without tighter restrictions,” Florida Sen. Marco Rubio, a Republican and strong China hawk, warned on Twitter Monday.
The president’s announcement regarding ZTE confused many observers, who accused the president of putting his America First strategy on hold to focus on China’s needs. Trump has yet to fully explain his tweet, only offering a simple follow-up tweet telling everyone to “be cool.”
“China and the United States are working well together on trade, but past negotiations have been so one sided in favor of China, for so many years, that it is hard for them to make a deal that benefits both countries,” Trump tweeted Sunday. “But be cool, it will all work out!”
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