Chinese telecom company ZTE Corp (中興通訊) would have to change its management, including possibly appointing new board members, to win a reprieve from US sanctions that shut it off from key suppliers, the director of the White House National Economic Council said.
“We’re not talking about letting them off scot-free by any stretch,” US President Donald Trump’s top economic adviser Larry Kudlow said in an interview on Fox Business Network. “Commerce Secretary Wilbur Ross is having a second look at remedies. If there are any structural changes in their case they will be very harsh. Change of management. Change of board. Change of everything.”
Trump on Sunday last week ordered the US Department of Commerce to get ZTE back into business, weeks after the agency cut the company off from US suppliers as punishment for what Ross described as “egregious” violations of sanctions against trade with Iran.
The department’s action led to “too many jobs in China lost,” Trump said in a tweet.
A representative for ZTE declined to respond to Kudlow’s comment and the Chinese Ministry of Commerce did not immediately reply to an inquiry.
Trump on Thursday said that his decision to order a review of US penalties on ZTE came directly at the request of Chinese President Xi Jinping (習近平).
“This is not a real trade issue, this is a legal enforcement issue, and the question is, the Chinese government has asked for a bit of relief on the remedy. Doesn’t mean there won’t be a remedy; there’ll be a very strong remedy,” Kudlow said.
The US blockade forced the suspension of most operations at ZTE, which employs about 75,000 people. The firm’s shares were suspended from trading in Hong Kong last month.
In a sign that both sides are trying to avoid a trade war, Chinese regulators restarted their review of Qualcomm Inc’s application to acquire NXP Semiconductors NV, people familiar with the process said.
San Diego-based Qualcomm supplies semiconductors to ZTE.
US lawmakers have expressed concern that Chinese telecom companies pose a cyber espionage threat.
American Enterprise Institute China analyst Derek Scissors said changing leadership or board members at ZTE is a “foolish demand,” because they would only be replaced with similar people.
“It’s hard to be confident, but it does seem the administration has moved in the right direction,” Scissors said, referring to Kudlow’s comments about maintaining harsh penalties. “Sanctions on ZTE should not be bargained away.”
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