US says deal reached with China’s ZTE

Global Business

Chinese telecoms firm ZTE has been saved from collapse after U.S. President Donald Trump kept his pledge to help. It will mean some profound changes for a firm that arouses heated accusations in the U.S about intellectual property theft and espionage. But lawmakers from both parties have said they will try to block the deal.

CGTN’s Owen Fairclough has more.

ZTE has been facing financial ruin since the U.S. banned suppliers from trading with it after it was found to have violated sanctions related to doing business with Iran and the DPRK.

The Chinese telecom giant was caught in the trade crossfire between Washington and Beijing.

On Thursday, U.S. Commerce Secretary Wilbur Ross said the administration had reached a deal to lift the restrictions, but not without penalty. 

It will have to pay a $1B fine, place an addition $400 million in escrow, install a U.S.-selected compliance team for a 10-year term and replace its board of directors and senior management.

“We think this settlement, which brought the company, a $17 billion company to its knees,  more or less put them out of business. Now that they are accepting having this compliance team in, whole new management, whole new board, should serve as a very strong deterrent not only for them, but for other potential bad actors,” said Ross.

Trump had pledged to help ZTE, whose 75,000 worldwide employees were at risk.

But lawmakers plan to introduce bipartisan legislation blocking Trump. Republican Senator Marco Rubio tweeting: “This “deal” with #ZTE may keep them from selling to Iran and North Korea. But it will do nothing to keep us safe from corporate and national security espionage.”

Both Republicans and Democrats contend tech firms like ZTE pose a threat by forcing its U.S. commercial partners to share their trade secrets. China denies this.

Tao Zhang of DAO Ventures discusses the U.S. agreement with China’s ZTE

CGTN’s Rachelle Akuffo spoke with Tao Zhang, founder and managing director of DAO Ventures, about the U.S. agreement with Chinese telecoms firm ZTE.