The United States and China have reached a deal that allows the Chinese telecommunications giant ZTE to stay in business in exchange for paying an additional $1bn in fines and agreeing to let US regulators monitor its operations.

The fine comes after Donald Trump stepped in to save the company after US regulators barred it from doing business in the US, an effective death blow for the company.

In addition to the fine, a compliance team chosen by the US will be embedded at ZTE and the Chinese company must change its board and executive team.



“ZTE is essentially on probation,” said Amanda DeBusk, chair of the international trade and government regulation practice at Dechert LLP and a former commerce official. “It’s unprecedented to have US agents as monitors … It’s certainly a good precedent for this situation. ZTE is a repeat offender.”

The news did little to appease critics. Senator Mark Warner, vice-chairman of the Senate select committee on intelligence, said: “It is the unanimous conclusion of our nation’s intelligence community that ZTE poses a significant threat to our national security. These concerns aren’t new; back in 2012, the House permanent select committee on intelligence released a report on the serious counterintelligence concerns associated with ZTE equipment.

“It’s not only that ZTE was busted for evading sanctions on Iran and North Korea, and then lied about it; it’s that ZTE is a state-controlled telecommunications company that poses significant espionage risks, which this agreement appears to do little to address.”

In April, the commerce department barred ZTE from importing American components for seven years, having concluded that it deceived US regulators after it settled charges last year of sanctions violations. Instead of disciplining all employees involved, the department said, ZTE had paid some of them full bonuses and then lied about it.

The decision amounted to a death sentence to ZTE, which relies on US parts and which announced that it was halting operations. The ban also hurt American companies that supply ZTE.

Trump barged into the ZTE case last month by tweeting that he was working with the Chinese president, Xi Jinping, to put ZTE “back in business, fast” and save tens of thousands of Chinese jobs. He later tweeted that the ZTE talks were “part of a larger trade deal” being negotiated with China.

Trump has drawn criticism from members of Congress for going easy on the Chinese company. The Democratic senator Chuck Schumer of New York immediately responded to Thursday’s announcement: “Despite his tough talk, this deal with ZTE proves the president just shoots blanks.”

Still, the resolution of the ZTE case may clear the way for the US to make progress in its trade talks with China. The two countries have threatened to impose tariffs on up to $200bn worth of each other’s products in a dispute over China’s tactics to supplant US technological supremacy, including demands that US companies hand over trade secrets in exchange for access to the Chinese market.

Thursday’s agreement was “a prerequisite for making broader progress”, DeBusk said. “The ZTE case was a thorn in the side for China … For the US to shut down one of China’s largest companies is a very dramatic type of move. It certainly got their attention.”