By Joyce Yu
Philadelphia, PA–Sino-U.S. trade spat had a stunning reversal after the U.S. President Donald Trump announced Sunday he is working to give China’s sanctioned ZTE “a way to get back into business, fast.”
“President Xi of China, and I, are working together to give massive Chinese phone company, ZTE, a way to get back into business, fast. Too many jobs in China lost. Commerce Department has been instructed to get it done!” Trump wrote in a tweet Sunday.
As one of the biggest Chinese smartphone and telecom equipment makers, ZTE is the fourth largest provider of smartphones in the United States with business presence around the world and employing about 75,000 people. The company’s operations has been “severely impacted” since last month after the US Commerce Department banned the company from buying components from American firms. Its stock suspended trading on the Hong Kong exchange since April 16.
Last week, ZTE further announced last week that it has halted its main operations. New York Times reported Wednesday that manufacturing has been shuttered at the company’s plant in Shenzhen. Some of the company’s products, from smartphones to telecommunications equipment, appeared to no longer be for sale online.
Two people briefed on Sino-U.S. trade discussions told Reuters that during trade talks in Beijing earlier this month, Chinese Vice Premier Liu He told U.S. 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
“The message was, ‘we have to deal with ZTE before we continue talks’,” one of the people said.
White House confirmed that U.S. officials were in contact with Beijing regarding ZTE. Its spokeswoman Lindsay Walters said Trump’s tweet underscored the importance of “free, fair, balanced and mutually beneficial” relations between the United States and China on issues involving the economy, trade, and investment.
The Chinese government also welcomed Trump’s comments. Chinese Foreign Ministry spokesman Lu Kang said, “We very much appreciate the positive statement from the US side on ZTE and maintain close communication with them on the issue.”
Undoubtedly, the ban on ZTE is also affecting American companies. Not only an important customer to large U.S. corporates like Qualcomm and Intel, but ZTE also buys parts for telecoms equipment from smaller American companies like Acacia and Oclaro.
“The Trump administration is softening its stance,” said Ken Cheung, a currency strategist at Mizuho Bank in Hong Kong. “The second round of negotiation should be more constructive.”
Chinese Vice Premier Liu He will lead a Chinese delegation visiting Washington this week, but McGregor, an expert on Chinese politics and international relations, told CNN that he doesn’t think Liu will offer any big concessions on the trade deficit, but will rather focus on measures to open up China’s markets to more American investment.