Economy

Donald Trump says working with Xi Jinping to save telecom giant ZTE

Donald Trump says working with Xi Jinping to save telecom giant ZTE

Trump tweeted on Sunday that he was working with Chinese President Xi Jinping to "find a way to get back into business, fast".

But in light of the ongoing trade war between the USA and China, the Trump administration may not back down so easily, which would threaten ZTE's ongoing existence.

ZTE, a smartphone and telecom equipment maker that does business around the world, announced last week that it has halted its main operations after the Trump administration banned American companies from selling it vital components.

"The company paid over US$2.3 billion to 211 USA exporters in 2017, a senior ZTE official said".

As a result, the Trump administration barred US firms for seven years from exporting critical microchips and other parts to ZTE, the world's fourth-largest smartphone manufacturer.

The ban came two months after two Republican senators introduced legislation to block the United States government from buying or leasing telecommunications equipment from ZTE or Huawei, citing concern the companies would use their access to spy on USA officials.

Digicel made its announcement yesterday after ZTE Corp said on Wednesday that its main business operations had ceased due to the ban imposed by the USA government. ZTE misled the Department of Commerce.

ZTE was not banned from selling its products in the US, where it is the fourth most popular smartphone brand, but would nonetheless have needed to immediately transform its supply chain to be able to continue to manufacture devices without USA -made parts.

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Against that background, the Trump administration has barred military and government employees from using smartphones from ZTE and fellow Chinese maker Huawei.

It looks like ZTE may get a reprieve.

In response to the sanctions, Trump has now pledged to help the Chinese phonemaker "get back into business". This, in turn, will affect the company's ability to provide services, such as repairs to infrastructure for clients in other countries and regions.

In the current climate, Gold said, USA lawmakers appear inclined to impose stricter limits on Chinese investments in United States tech firms as a way to stay ahead of China.

The US action could be devastating to ZTE.

Trump's reassurance comes as the US and China - the world's two largest economies - have hit each other with tariffs in an escalating trade battle.

His advisers have launched official or unofficial trade discussions with numerous countries, and these talks are wrapped in uncertainty because it is unclear whether Trump will follow through on promises to impose tariffs, even if they might raise prices for USA consumers.