China’s ZTE to resume trading after $1.4-billion US settlement

Galtero Lara
Junio 13, 2018

After Trump announced his deal with China and ZTE last week, Senate leaders said they would seek to reverse it. But after the US government determined the company lied about its clean-up efforts, the Commerce Department imposed the death sentence, banning USA businesses from selling parts to ZTE, effectively kneecapping the company. John Cornyn (R-Tex.). "There'll be a conference between the House and the Senate on the defense authorization bill". The U.S. export ban would be lifted in exchange for a $1 billion fine, $400 million in escrow to cover future issues, the naming of a new Board and executive team, and the installation of a U.S. selected compliance team that would be put in place at ZTE headquarters.

But Trump then announced in mid-May that he was working with Chinese President Xi Jinping to find a way to get ZTE back into business.

The entire boards of directors of ZTE Corp. and ZTE Kangxun will be replaced within 30 days of the agreement dated June 7, and all members of senior leadership at or above the senior vice-president level and employees responsible for the export violations will be terminated, according to the settlement.

ZTE is back in business: What now?

A woman passes by a ZTE building in Beijing, China shortly after President Donald Trump tweeted about possibly reversing a ban on the tech giant in May. It's a stunning turnaround, though it had been signalled for some weeks. This bill is usually passed easily with support from both sides of the aisle. That version prevents the government from purchasing ZTE and Huawei products - but doesn't reimpose the sanctions-related restrictions lifted under Trump's deal.

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They were even more surprised that the leniency came on ZTE. However, it wouldn't be the first time the President chose the unexpected route.

Jeffries said it expected ZTE to pay its penalty in a few days and resume operations next week.

Republican and Democratic lawmakers introduced the amendment last week. Although $1.4 billion is not a small amount of money, it sets the stage for other companies to also violate trade laws under the assumption that, at worst, they'll have to pay a hefty fine.

Sen. Cotton explained on Twitter that ZTE has extensive ties with the Chinese Communist Party and a record of doing business with North Korean and Iran.

Investors wiped about $3 billion off embattled Chinese telecommunications giant ZTE Corp's (0763.HK) (000063.SZ) market value as it resumed trade on Wednesday after agreeing to pay up to $1.4 billion in penalties to the USA government. "For me, it was more than that".

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