Trump, Xi throw ZTE some lifeline

President Trump just saved embattled Chinese phone maker ZTE

President Trump just saved embattled Chinese phone maker ZTE

But now, barred from using US microchips, software and other components, ZTE has been facing the prospect of being unable to manufacture its telecommunications equipment and smartphones.

Then, last month, the Commerce Department issued a denial order against the company, asserting that it had not properly held relevant employees accountable for the sanctions violations and that it had misled US officials, therefore violating the settlement terms.

The case dates to before Trump took office in January 2007 but the Commerce Department's decision came amid worsening trade tensions between the US and China centered on technology-related intellectual property.

The concession - considered a major reversal of Mr Trump's plan - comes ahead of high-level trade talks between Washington and Beijing, and follows months of rising tensions and the threat of a looming trade war between the two powerful countries. Experts have since said the company could be circling the drain.

One 2012 congressional report about ZTE and Huawei, another huge Chinese tech company, said the companies "cannot be trusted to be free of foreign state influence and thus pose a security threat to the United States and to our systems".

Trump, who has taken a hard line on trade and technology issues with Beijing, tweeted on Sunday that he and Chinese leader Xi Jinping "are working together to give massive Chinese phone company, ZTE, a way to get back into business, fast".

US President Donald Trump may reconsider trade sanctions on China's major telecom-equipment maker ZTE.

Last year, ZTE pleaded guilty in us federal court to conspiring to sell USA technology to Iran and North Korea, violating economic sanctions and trade export rules.

It was not exactly clear what Trump was proposing for ZTE, or whether it would involve rolling back the Commerce Department's decision. Trump wrote on Twitter in the first of two tweets about US trade relations with China. There's clearly a gap of thinking between the President and the rest of government.

The Commerce Department did not immediately respond to a request for comment on Sunday.

The company was slapped with sanctions by the U.S.

A U.S. blockade has choked off the revenue of the No. 2 Chinese telecom company, which regards the next two weeks as crucial as it faces potential collapse.

A bit of background: ZTE is one of the largest smartphone makers in China, where the company employs 75,000, according to The New York Times.

ZTE was also handed a seven-year suspended denial of export privileges, which the commerce department chose to activate last month after determining the company had lied about its handling of the matter.

Trump's comments on ZTE could have a significant impact on shares of American optical components makers such as Acacia Communications Inc and Oclaro Inc, which fell when US companies were banned from exporting goods to ZTE.

Republican Representative Robert Pittenger, a sponsor of legislation that would strengthen the USA national security review process for foreign investment, said after the Commerce ban was announced that the United States "must be vigilant against Chinese threats to both our economic security and national security". But be cool, it will all work out!' he wrote in the second tweet.

Without access to such technology, the company has been forced to partially shut down.

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