Chinese phone maker ZTE saved from brink after deal with U.S.

Chinese phone maker ZTE saved from brink after deal with U.S.

The US reached a deal to allow ZTE Corp to get back in business after the Chinese telecommunications company pays a record-large fine and agrees to management changes, eliminating a key sticking point as the two countries try to avert a trade war.

Trump has indicated he views the handling of ZTE as part of his administration's broader effort to renegotiate trade conditions with China. The deal also includes a new 10-year ban that is suspended unless there are future violations.

In addition, the company is agreeing to retain a team of special compliance coordinators selected by USA regulators.

ZTE has become a critical part of the broader discussions between China and the USA, the two largest economies in the world, over trade tensions and whether the two countries can prevent a trade war that could involve billions of dollars' worth of tariffs.

Commerce Secretary Wilbur Ross told CNBC this morning that the USA has struck a deal to lift sanctions on the electronics giant.

The Commerce Department said ZTE must also put $400 million in escrow - a sum it would forfeit if it violated Thursday's agreement.

"This is a pretty strict settlement, the strictest and largest fine that has ever been brought by the Commerce Department against any violator of export controls", Ross said in an interview with CNBC.

ZTE could not be reached for comment by either Reuters or the Post.


In April, the Commerce Department barred ZTE from importing American components for seven years, having concluded that it deceived USA regulators after it settled charges last year of sanctions violations: Instead of disciplining all employees involved, Commerce said, ZTE had paid some of them full bonuses and then lied about it. China has vowed to retaliate on everything from US soybeans to airplanes, and said it will abandon its commitments if the USA follows through on its tariff threat.

ZTE's survival has been a topic of discussion in high-level U.S.

But last month, President Trump tweeted that "too many jobs in China" were being lost because of the US action and that he had instructed the Commerce Department to find a solution. Separately, Qualcomm is trying to get Chinese approval for its pending US$44 billion acquisition of NXP Semiconductors NV NXPI.O .

The US Department of Commerce has finally come to an agreement with the Chinese telecom company ZTE (HKSE:0763).

Do you think this agreement will act as a good way to keep ZTE in check? Shares of Qualcomm Inc QCOM.O rose 2 per cent to US$61.255, while NXP jumped 6.2 per cent to US$121.60.

ZTE supplier Oclaro Inc rose nearly 1 percent while Acacia Communications Inc was down 1.5 percent.

The U.S. had imposed sanctions on ZTE for illegal sales to Iran and North Korea, but the Chinese company agreed to take corrective action.

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