This article is more than 2 years old

This article is more than 2 years old

In a surprise policy reversal, Donald Trump said on Sunday he had instructed his commerce department to help get a Chinese telecommunications company “back into business”, after his government cut off access to its US suppliers.

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The US commerce department last month blocked ZTE, a major supplier of telecoms networks and smartphones based in Shenzhen in southern China, from importing American components for seven years. The US accused ZTE of misleading US regulators after it settled charges of violating sanctions against North Korea and Iran.

The US discovered that ZTE, which had paid a $1.2bn fine, had failed to discipline employees involved and paid them bonuses instead.

During recent trade meetings in Beijing, Chinese officials said they raised objections over ZTE’s punishment with the US delegation, who they said agreed to report them to Trump.

Trump’s move on Sunday to reverse the ban was a major concession to Beijing ahead of high-stakes trade talks in Washington this week. US officials are preparing to meet with China’s top trade official, Liu He, to resolve an escalating dispute between the world’s two largest economies.



One Democratic lawmaker said Trump’s move jeopardised US national security.

“Our intelligence agencies have warned that ZTE technology and phones pose a major cybersecurity threat,” Adam Schiff, senior Democrat on the House intelligence committee, wrote on Twitter. “You should care more about our national security than Chinese jobs.”

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Claire Reade, a Washington-based trade lawyer and former assistant US trade representative for China affairs, told Reuters the ZTE ban was a shocking blow to China and may have caused more alarm in Beijing than Trump’s recent threats to impose tariffs on $50bn in Chinese goods.



“Imagine how the United States would feel if China had the power to crush one of our major corporations and make it go out of business,” Reade said. “China may now have strengthened its desire to get out from a under a scenario where the United States can do that again.”

Even though ZTE was probably “foolish” in not understanding the consequences of violating a commerce department monitoring agreement, Reade said, the episode makes it less likely that China will make concessions on US demands that it stop subsidizing efforts to develop its own advanced technology.

Other experts said Trump’s policy reversal was unprecedented. “This is a fascinating development in a highly unusual case that has gone from a sanctions and export control case to a geopolitical one,” said Washington lawyer Douglas Jacobson, who represents some of ZTE’s US suppliers.

Trump’s reversal will probably have a significant impact on companies such as Qualcomm and Intel. American firms are estimated to provide 25% to 30% of the components used in ZTE equipment, which includes smartphones and gear to build telecommunications networks.



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ZTE has more than 70,000 employees and has supplied networks or equipment to some of the world’s biggest telecoms companies. By cutting off access to US suppliers of essential components such as microchips, the ban threatened ZTE’s existence, the company has said. It asked the US commerce department to suspend the ban. In early May it said it had halted its main operations.

Trump, who has taken a hard line on trade and technology issues with Beijing and campaigned relentlessly on protecting jobs in the US, tweeted on Sunday that he and the Chinese leader, Xi Jinping, were “working together to give massive Chinese phone company, ZTE, a way to get back into business, fast”.

“Too many jobs in China lost,” the president wrote. “Commerce department has been instructed to get it done!”

The commerce department did not immediately respond to requests for comment.



Trump later tweeted: “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. But be cool, it will all work out!”