U.S. Senate clashes with Trump on China’s ZTE


Chinese telecom giant ZTE has had a rocky couple of months. It’s not out of the woods yet.

The company nearly shut down after the U.S. Commerce Department cut off the 25-30 percent of its supply chain that comes from America on April 14, following an investigation that found it had violated sanctions on Iran and North Korea. Li Yuan, a new columnist at the New York Times, calls this a possible “sputnik moment” for China (paywall), because as long as the country still imports 90 percent of its semiconductor components, its technological prosperity is “built on sand.”

President Donald Trump then decided to save the company and strike the deal, in what trade adviser Peter “Death by China” Navarro recently described as “a personal favor to the president of China as a way of showing some goodwill for bigger efforts, such as [the nuclear summit with North Korea] in Singapore.” Details of that deal for ZTE’s pay-to-play were announced last week.

Now a bipartisan group of U.S. senators has inserted an amendment into the 2019 National Defense Authorization Act that again puts the future of ZTE in question.

  • “At this point, the only fitting punishment is to give them the death sentence,” Republican Senator Tom Cotton of Arkansas said of ZTE as he advocated for the amendment, the SCMP reports.
  • ZTE is “a multiple and flagrant violator of U.S. sanction laws and we can’t let them off the hook with the slap on the wrist,” Democratic Senator Chris Van Hollen of Maryland added.
  • ZTE’s stock fell 40 percent on June 13, the day that its trading resumed, on the news of its new limbo, the New York Times reports (paywall).
  • But these efforts are “likely to fail,” political analysts at the Eurasia Group said in a statement cited by the SCMP, because the Republican-controlled House of Representatives will be “reluctant to challenge the administration so close to the [Fall 2018 midterm elections].”

In and out of Congress, there are still many questions being raised about exactly how Trump was persuaded to strike a deal to bring ZTE back.

  • “Trump’s kid-glove treatment of the company raises questions about possible links between it and Trump family businesses,” write (paywall) a political scientist and two lawyers, one of whom is serving as co-counsel in a case against Trump for accepting foreign bribes, in the New York Times.
  • They suggest that ZTE is being saved as part of a “bargain” to personally benefit the Trump family, pointing to a China-linked project with Trump’s name in Indonesia, new China trademarks for Ivanka Trump, and the news that Ivanka Trump and her husband, Jared Kushner, raked in $82 million last year from not-fully-disclosed sources while serving as White House advisers.