China’s ZTE will pay $1B fine in deal with US

Today a U.S. Commerce Department spokesman said that an agreement is pending between the United States and ZTE that would see ZTE pay a hefty fine and in exchange be allowed to purchase crucial components again.

Visitors pass in front of the Chinese telecoms equipment group ZTE Corp booth at the Mobile World Congress in Barcelona, Spain, February 26, 2018. And ZTE, he said, “is being used by the communist Chinese government to advance their goals”.

The company employs 75,000, including about 30,000 in research and development.

Derek Scissors, a resident scholar at the American Enterprise Institute, a Washington think tank, said that even if compliance officers were allowed into ZTE, they wouldn’t prevent China from violating sanctions.

In 2017, sales were about $17.2 billion.

The ban amounted to a death sentence for the company, which relies on USA parts.

A Van Hollen provision already in the defense bill would require Trump to certify to Congress that certain Chinese telecommunications companies such as ZTE and Huawei have obeyed USA laws for one year and worked in cooperation with US investigators before pulling back the economic sanctions imposed on the companies. The ban also hurt American companies that supply ZTE.

If you’ll recall, last month ZTE was handed an export ban as the result of not following the terms of a court case years ago. Among its products are 4.5G networks, wireless broadband, cloud services, data centers and banking systems. Key US components-such as glass from Corning, processors from Qualcomm, and software from Google’s Android-were no longer available to the company, meaning it could not make many of its phones.

Meanwhile, the USA government is also looking at limiting Chinese investment, and will report by the end of this month how it plans to tighten scrutiny of that.

Beijing’s reported offer to buy $70 billion in goods was “peanuts” compared to the $200 billion cut in the U.S. trade deficit with China that Trump demanded, Reinsch told AFP.

Shenzhen-based ZTE has a subsidiary in Richardson, Texas. “It’s unprecedented to have U.S. agents as monitors …” The U.S. Department of Commerce wishes to amend the settlement agreement so that the $361 million that the company had already paid would be included.

The problems with ZTE extend beyond its violations of sanctions. The reversal is the latest twist in a roller coaster of trade tensions between the U.S. and China. “Van Hollen don’t agree on much, but thank God when it comes to national security, they’re agreeing”, Schumer said earlier in the day on the Senate floor. “This “deal” with #ZTE may keep them from selling to Iran and North Korea”.

There was anger, too, on the Republican side among those members who aren’t particular fans of the current occupant of the White House, such as this missive from Senator Marco Rubio (R-FL), or Little Marco as President Trump likes to call him.