World Trump vows to save jobs at China's ZTE lost after U.S. Sanctions

SHANGHAI — President Donald Trump wrote on Twitter on Sunday that he was working with his Chinese counterpart, Xi Jinping, to prevent the collapse of the Chinese electronics giant ZTE, which shut down major operations after being sanctioned by the U.S. Department of Commerce last month.

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(NY Times)
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“Too many jobs in China lost,” Trump wrote. “Commerce Department has been instructed to get it done!”

The department last month banned shipments of U.S. technology to ZTE for seven years, saying the company had failed to reprimand employees who violated U.S. trade controls on Iran and North Korea. The department said Sunday that it had no comment.

The company had already agreed last year to a $1.2 billion fine in connection with those violations. But now, barred from using U.S. microchips, software and other components, ZTE has been facing the prospect of being unable to manufacture its telecommunications equipment and smartphones.

Trump’s tweet on Sunday left many scratching their heads. The president has taken a tough stance on what his administration deems unfair trade practices by the Chinese government. And he has trumpeted his efforts to safeguard U.S. jobs even if it means creating economic strain in other countries.

The prospective shutdown of ZTE has been seen as major leverage in continuing trade discussions between China and the United States over Chinese trade practices. If Trump was announcing a huge concession with his tweet, it was without any indication of what he might have gotten in return.

“Given his pressure on Beijing on trade, I don’t understand concern for Chinese jobs” in the tweet, said Adam Segal, a technology and security expert at the Council on Foreign Relations. It “goes against the steady stream of security warnings about ZTE,” he added.

Scott Kennedy, a fellow at the Center for Strategic and International Studies in Washington, said that in expressing concerns about Chinese jobs, Trump was reiterating the case made by Beijing on ZTE’s imminent collapse.

“Jobs is the talking point,” he said, adding that for Trump to write about Chinese jobs in the tweet, “it must have just been part of the conversation, which would have come from the Chinese side.”

ZTE said on Wednesday that it had halted “major operating activities.” It has 75,000 employees and says it has business in more than 160 nations. Although large U.S. wireless carriers do not use the company’s telecommunications equipment out of security concerns, it is the No. 4 smartphone brand in the United States, behind Apple, Samsung and LG.

Chinese officials raised objections to the penalties on ZTE when a U.S. negotiating team visited Beijing earlier this month. The U.S. officials had brought a list of demands for the Chinese government that included a halt to all subsidies to advanced manufacturing industries.

No deal was reached. Liu He, a top economic adviser to Xi, is due to visit Washington soon to follow up on discussions.

In reality, ZTE represents much more than jobs for China. As a maker of the equipment that undergirds cellular networks, the company plays a crucial role in China’s innovation drive and its push to influence technology outside its borders. ZTE’s closing wouldn’t just mean a loss of jobs, it would represent a major setback for Chinese ambitions to become self-reliant technologically and to develop top technology companies.

The U.S. government is also investigating ZTE’s main Chinese rival, Huawei, for breaking U.S. sanctions to a number of countries, including Iran and North Korea. Much larger than ZTE and far more critical to China’s industrial policy plans, Huawei could be a much more significant chip in trade negotiations.

Both ZTE and Huawei have been the subject of repeated security warnings by the U.S. intelligence establishment. The two telecom equipment makers have a close relationship with China’s government, and a 2012 report from Congress cautioned that allowing the companies to build out U.S. cellular networks would be a threat to national security.

This article originally appeared in The New York Times.

PAUL MOZUR and RAYMOND ZHONG © 2018 The New York Times

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