Chinese telecoms company ZTE will have to change its management, including by possibly appointing new board members, to win a reprieve from US sanctions that shut it off from key suppliers, the director of the White House National Economic Council said.

“We’re not talking about letting them off scot-free by any stretch,” Larry Kudlow, US President Donald Trump’s top economic adviser, said on Friday in an interview on Fox Business Network.

Trump denies ZTE deal and says China has ‘much to give’ US on trade

“Commerce Secretary Wilbur Ross is having a second look at remedies. If there are any structural changes in their case they will be very harsh: change of management. Change of board. Change of everything.”

Trump on Sunday ordered the Commerce Department to get ZTE back into business, weeks after the agency cut the company off from US suppliers as punishment for what Ross described as “egregious” violations of sanctions against trade with Iran. Trump said in a tweet “too many jobs in China lost” because of the Commerce Department action. 

His instructions on ZTE were seen as a major reversal by a president who has talked tough for years about Chinese trade practices.

“This is not a real trade issue, this is a legal enforcement issue,” Kudlow said. “And the question is, the Chinese government has asked for a bit of relief on the remedy. Doesn’t mean there won’t be a remedy; there’ll be a very strong remedy.”

Trump defends ZTE support as part of ‘larger trade deal’ with China

ZTE said last week it has suspended all major operations as a result of the US action and its shares stopped trading in Hong Kong last month. Trump said on Thursday that his decision to order a review of US penalties on ZTE came directly at the request of Chinese President Xi Jinping.


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