Chinese telecom giant ZTE played an important role in Donald Trump’s trade talks with China. Despite Trump’s promise to keep ZTE in business, his plan didn’t go as well as expected.
Since last week, the trade tension between the U. S. and China seems to have subsided as President Donald Trump redirected his energy to car tariff disputes with the European Union. But his business with China is far from over. At this point, maybe the president just doesn’t want people to pay too much attention anymore because it doesn’t look like he’s winning the game.
ZTE, China’s second largest telecommunication company whose recent fate has been closely tied to the U. S.-China trade talks, is still teetering on the verge of collapse despite President Trump’s personal promise to keep it afloat.
But how did one single tech company take center stage within the two countries’ trade negotiations over $700 billion of imports and exports in the first place?
To understand the role ZTE plays in international policies, it’s important to know that there has been a U. S.-China tech war parallel to the U. S.-China trade war. As Chinese tech giants ‘ global influence rises, so does America’s fear over their threat to U. S. national security.
In February, top officials at six U. S. intelligence agencies openly advised U. S. citizens against using smartphones made by Huawei, China’s largest smartphone maker which was about to launch a new phone in the U. S. The officials were particularly concerned with Huawei’s close relationship with the Chinese government. They feared that using its smartphones would expose American consumer data to Beijing.
The government’s pressure directly led to AT&T’s last-minute withdrawal from a carrier deal with Huawei. (Huawei’s head of consumer business got so angry that his own communication team had to distance him from the company to avoid damaging the corporation’s image.)
In that context, ZTE, although lesser known to American consumers, is an even bigger threat in the eyes of U. S. regulators.
ZTE purchases most of its key components, including smartphone chips, from American companies like Qualcomm and Intel. According to previous media reports, about 30 percent of ZTE’s components are made in the U. S. In March 2017, the Commerce Department slapped the company with a record $1.2 billion fine after finding out that ZTE had been exporting products containing American components to Iran and North Korea, which violated the U.
