Trump's Cave to China's ZTE Hurts His Iran Strategy

Trump's Cave to China's ZTE Hurts His Iran Strategy

In an abrupt turn of events, Trump tweeted on Sunday that he was working with Chinese President Xi Jinping to try to help ZTE get back into business and had instructed the US Commerce Department to find a solution, citing that ZTE's closure would cost too many jobs in China.

The United States wants China to give a timetable on how it will open up its markets to U.S. exports as the two countries are still "very far apart" on resolving trade frictions, U.S. Ambassador to China Terry Branstad said on Tuesday.

Also in April, Trump threatened to introduce extra tariffs on the Chinese imports worth about 150 billion dollars per year.

Trump on Monday had defended his decision to revisit penalties on ZTE for flouting USA sanctions on trade with Iran, in part by saying it was reflective of the larger trade deal the United States is negotiating with China. The block on ZTE was a heavy blow for the company but also hurt the USA companies it buys from.

President Donald Trump on Monday defended his efforts to help a Chinese telecommunications company that violated US sanctions "get back into business, fast", despite criticism from Democrats and Republicans that the company poses a national security risk.

"Bargaining away law enforcement power over bad actors such as ZTE undermines the historically sharp distinction between sanctions and export control enforcement and routine trade decisions made by the US", they wrote.

Earlier this month, as NBC News reported, the Pentagon ordered stores at US military bases to stop selling ZTE and another Chinese brand of cellphones and modems, saying the devices may pose a security risk.

This baffled observers of all stripes-and of course, directly contradicts the United States position articulated by commerce secretary Wilbur Ross, who says the ban on ZTE sales was an independent law enforcement action, not a negotiating ploy.

Despite the US ban, the Washington Free Beacon has reported that ZTE was selling equipment to the Pentagon and Homeland Security Department. An irate President Xi of China, guided by his foremost economic advisor has asked for the lifting of the seven year embargo on the phone company before proceeding further.

But an unexpected twist happened over the weekend when Trump said on Twitter that he is going to help get ZTE back to business.

ZTE's situation convinced many Chinese that rather than being dependent on foreign suppliers, the country must manufacture key technology products itself.

If Trump concedes to Beijing's other demands, he would be declaring the United States' surrender in the economic struggle against China before the fight really begins. The policy involves subsidizing Chinese firms so they can dominate domestic markets for hi-tech products such as artificial intelligence and new energy vehicles.

Earlier this month, a US delegation led by Treasury Secretary Steven Mnuchin presented China with a list of demands to tackle allegations of intellectual property theft and other trade policies Washington considers unfair. Reuters reported China is "willing in principle" to import more us agricultural products in return for easing penalties on ZTE.

Those policies did not start with Made in China 2025.

The widening trade dispute between the world's two biggest economies has taken a toll on both sides.

China objected to ZTE's punishment at trade talks in Beijing this month, and the American delegation agreed to report their concerns to Trump. And in theory they won't have much of a choice because America's economy is so much bigger than Iran's.

The Trump administration may give ZTE a way out.

Evanina said US intelligence agencies are on record as assessing that Chinese telecommunication firms are used as a vehicle by the Chinese government to conduct espionage. Both the USA and Chinese governments are suspicious that each others' chips and phones may contain "back doors", compromising the security of users' data.