US President Donald Trump has been tough on China on trade, and his tweet over the weekend about helping big Chinese telecoms company ZTE Corp get back on its feet is not an indication that the president is backing down from his election campaign promises, the White House said on Monday.
ZTE is a high concern of China and Trump has asked Commerce Secretary Wilbur Ross to look into whether a US ban on selling the company American technology is consistent with US laws and regulations, White House principal deputy press secretary Raj Shah said.
President Xi of China, and I, are working together to give massive Chinese phone company, ZTE, a way to get back into business, fast. Too many jobs in China lost. Commerce Department has been instructed to get it done!
— Donald J. Trump (@realDonaldTrump) May 13, 2018
Trump shocked Washington with a Twitter post on Sunday that said he was working to give ZTE “a way to get back into business, fast.”
“President Xi of China, and I, are working together” as “too many jobs in China [are] lost”, the tweet said.
The remarks are a sudden and complete reversal from just last month when the administration cut off the second largest telecoms equipment maker in China from its American suppliers for violating the US’s Iran sanctions.
ZTE pleaded guilty last year to conspiring to violate US sanctions by illegally shipping US goods and technology to Iran and entered into an agreement with the US government. The ban is the result of ZTE’s failure to comply with that agreement, the Commerce Department said.
ZTE suspended its main operations earlier this month, crippled by the harsh penalty by the US Commerce Department.
The abrupt change in Trump’s stance is seen as a concession to Beijing ahead of high-stakes trade talks this week.
China’s vice-premier, Liu He, the country’s top trade official, is to arrive in Washington on Tuesday for a five-day trade negotiation with a team led by US Treasury Secretary Steven Mnuchin that aims to ease tensions between the world’s two largest economies.
Shah said Trump has been tough on China in respect of trade issues, introducing up to US$150 billion of tariffs.
But ZTE “is part of a very complex relationship the US has with China,” the deputy press secretary said.
“The issue has been raised by many levels of the Chinese government. It’s a significant issue of China. And in a bilateral relationships, there are gives and takes,” Shah said.
Shah didn’t disclose whether China has made any concessions.
Ross said on Monday that his department is exploring “alternative remedies” to punish ZTE for flouting US sanctions on trade with Iran after Trump intervened, Reuters reported.
But enforcement of the sanctions infraction is a separate issue from the high-level talks taking place this week, Ross said. “The gap remains wide,” Ross told journalists during an address at the National Press Club in Washington, according to Reuters.
The US and China have already proposed tens of billions of dollars in tariffs in recent weeks, fuelling concerns about the outbreak of a full-on trade war that could hurt businesses globally.
Washington has reacted critically towards Trump’s tweet, arguing the softened approach on ZTE can damage the US’s demand that China cut subsidies for its hi-tech sector and reduce its trade surplus by at least US$200 billion.
Charles Schumer, the top Democrat in the Senate, tweeted Monday: “How about helping some American companies first?”’
Senator Marco Rubio, a Florida Republican, tweeted that the US would be “crazy” to allow ZTE to operate in the US “without tighter restrictions”.
Others contended that the sudden change of heart on the ZTE issue can undermine the administration’s position in future cases, including allegations against Chinese tech giant Huawei’s violation of the Iran sanctions.
Trump’s reversal on ZTE has so far been a positive for ZTE’s US suppliers.
Shares of Intel and Oclaro were trading up on Monday and Qualcomm rose close to 3 per cent midday to its highest level in the past two months.
American companies are estimated to provide 25 per cent to 30 per cent of the components used in ZTE’s equipment, which includes smartphones and gear to build telecommunications networks.