As China’s ZTE Crosses Last Hurdle To Lift US Ban, Shares Skyrocket
As Chinese telecommunications giant ZTE moves closer to work off its ban in the U.S., the company’s shares have been skyrocketing.
ZTE shares rose by 24 percent on Thursday, just one day after the Department of Commerce announced the signed agreement between the U.S. and ZTE, Reuters reported.
ZTE paid its $1-billion fine for violating U.S. sanctions on Iran and North Korea by selling U.S. parts to the nations. The Commerce Department placed a ban on the company in April.
Once ZTE places the mandated $400 million in a U.S.-approved escrow account, the U.S. will have completely lifted the ban. Should ZTE violate any part of the U.S. agreement or another sanction, the U.S. will keep the $400 million; if the company doesn’t, in 10 years time, they will receive the money back.
As another condition of the U.S.-ZTE deal, the telecoms giant replaced its board of directors. A top official at ZTE, Zhang Zhenhui, said his departure was “deeply humiliating.”
“In the environment of a Sino-US trade war, in the ‘white terror’ of a technology war, all executive presidents including me have signed termination contracts to formally leave the company yesterday,” wrote Zhenhui in his departure letter.
“The ZTE settlement represents the toughest penalty and strictest compliance regime the Department has ever imposed in such a case,” the Commerce Department said in a statement. It expects the punishment to “deter future bad actors.”
“[Wednesday’s] announcement marks the beginning of the end of this long-running saga,” said a Washington attorney who represents ZTE suppliers, Douglas Jacobson.
ZTE and other Chinese companies are considered national security threats due to their close relationship with the communist-controlled Chinese government. (RELATED: Chinese-Linked Tech Company Attacks US Lawmakers Over National Security Threat Accusations)
The Department of Defense banned the sale of ZTE and Huawei devices on military bases over security concerns, including the possibility of the Chinese government tracking users, The Daily Caller reported in May.
President Donald Trump has continued to battle China in a trade war. This ZTE deal is at the heart of the fight. Trump was a vocal critic of China and the country’s companies’ trade practices during the 2016 presidential election.
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