China's ZTE says USA sanctions have crippled operations

14 May, 2018, 00:34 | Author: Lora Ball
  • A salesperson stands at counters selling mobile phones produced by ZTE Corp. at an appliance store in Wuhan in central China's Hubei province in a file

In a statement Wednesday, ZTE said "the major operating activities of the company have ceased".

A May 1 formal request by ZTE to the US Commerce Department for an immediate stay of the April 15 ban went unheeded, according to a person familiar with the matter. Those mandated reprimands never happened and it was this that triggered the Department of Commerce's move last month to officially ban U.S exports to the company.

"If evidence now exists to implicate ZTE, we believe it is appropriate for Commerce to take immediate action", the lawmakers wrote in the letter, which was addressed to secretaries of President Barack Obama's Treasury, Commerce and State departments.

Given that US sanctions were imposed on ZTE due to threats to national security and its violation of trade sanctions with Iran and North Korea, Trump's desire to give the company another chance in the U.S.is truly unexpected.

ZTE is one of the world's biggest telecommunications equipment makers.

The comment marks a dramatic shift in tone for a president who has long accused China of stealing U.S.jobs - and could presage a reversal of one of the Trump administration's toughest actions to date against a Chinese company. The order was causing "irreparable harm" to the company and partners, as well as millions of consumers, including those who own its phones and major network operators, the person said. By cutting off access to United States suppliers of essential components such as microchips, the ban threatens ZTE's existence, the company has said.

More news: President Trump: North Korea Has Released 3 US Detainees

Last week, the company said that its earnings have surged, reporting a 39 percent jump in net income for the first quarter.

ZTE's failure to comply with the 2017 Commerce Department settlement included not reprimanding or cutting bonuses to 35 employees tied to the wrongdoing, and making false statements, the Commerce Department previously found.

The firm is the second-largest telecom equipment firm in China and pulled in nearly $17 billion in revenue previous year.

The U.S. military banned ZTE from selling products on its bases earlier this month over surveillance concerns.

Chinese Vice Premier Liu He is expected to resume trade talks with the Trump administration this week, after discussions in Beijing last week yielded no agreement on a long list of United States trade demands.

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