President Donald Trump said on Sunday the U.S.is working to level the playing field regarding trade with China, as the two countries aim to avoid a trade war by continuing discussions in Washington this week.
Whether or not ZTE actually gets another chance is another matter.
President Donald Trump wrote on Twitter on Sunday that he was working with his Chinese counterpart, Xi Jinping, to prevent the collapse of the Chinese electronics giant ZTE, which shut down major operations after being sanctioned by the U.S. Department of Commerce last month.
Those actions led to a US$1.2 billion fine previous year, with the current export ban imposed in April after ZTE allegedly failed to live up to its agreement, lying about the punishment of employees involved in the sanctions skirting.
Separately, lawmakers in the US have placed ZTE and even larger Chinese telecom companies in the cross hairs over their reputed ties to the Chinese intelligence and military establishment. But now, barred from using USA microchips, software and other components, ZTE has been facing the prospect of being unable to manufacture its telecommunications equipment and smartphones.
"Trump may have recognized that backing off on ZTE clears the path for him to claim at least a partial victory in the US-China trade dispute based on the concessions the Chinese seem prepared to offer".
ZTE's fibre-optic networks depend on USA components and its cheap smartphones sold en masse overseas are powered by United States chips and the Android operating system. "This egregious behavior can not be ignored".
Prior to announcing his run for president, meanwhile, Trump frequently tweeted about China stealing USA jobs.
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Republican Representative Robert Pittenger, a sponsor of legislation that would strengthen the U.S. national security review process for foreign investment, said after the Commerce ban was announced that the United States "must be vigilant against Chinese threats to both our economic security and national security".
The trade troubles threaten a technology sector that is increasingly intertwined with major players in the United States and China.
FBI Director Chris Wray explained why it is an issue for companies and local governments to use Huawei or ZTE products and services.
Several U.S. intelligence agencies have warned against buying ZTE and Huawei phones.
There is a risk of letting any company "beholden to foreign governments" inside the country's telecommunications infrastructure, he said.
Other experts said Trump's policy reversal was unprecedented.
Trump's announcement drew sharp criticism from a Democratic lawmaker, who said the move was jeopardizing USA national security. "You should care more about our national security than Chinese jobs".
Shares of ZTE suppliers including Acacia, Oclaro, Lumentum Holdings Inc, Finisar Corp, Inphi Corp and Fabrinet fell sharply after the ban was announced. Oclaro, which earned 18 percent of its fiscal 2017 revenue from ZTE, fell 17 percent.