Washington and Beijing are nearing a deal that would remove a US order banning US companies from supplying Chinese telecommunications equipment maker ZTE Corp (中興), two people briefed on the talks told reporters.
The people, who declined to be identified because negotiations are confidential, said the deal could include China removing tariffs on imported US agricultural products, as well as buying more US farm goods.
ZTE, hit by a seven-year ban last month that effectively crippled its operations, would gain a reprieve after the world’s two largest economies stepped back from the brink of a full-blown trade war following talks last week.
White House advisers have said that the ban against ZTE is being re-examined and that the firm would still face “harsh” punishment, including enforced changes of management and at board level.
One person told reporters there was a “handshake deal” on ZTE between US Secretary of the Treasury Steven Mnuchin and Chinese Vice Premier Liu He (劉鶴) during talks in Washington last week that would remove the ban in exchange for the purchase of more US agricultural products.
The second person said that China might also eliminate tariffs on US agricultural products it assessed in response to US steel duties and that ZTE could still be forced to replace its leadership, among other penalties.
Both sources said the deal, while not yet cemented, was likely to be finalized before or during a planned trip by US Secretary of Commerce Wilbur Ross to Beijing next week to help reach a broader trade pact to avert a trade war.
The publicly traded company, whose largest shareholder is a Chinese state-owned enterprise, had been hit with penalties for breaking an agreement from last year after it was caught illegally shipping US goods to Iran and North Korea in an investigation dating to the administration of former US president Barack Obama.
While US companies that sold products to ZTE would be relieved if a deal was reached, some in the US government, as well as the business community, have expressed opposition to what they saw as a clear-cut legal case being used as a bargaining chip in the broader trade conflict, the sources said.
US companies provide an estimated 25 percent to 30 percent of components in ZTE’s equipment, which includes smartphones and gear to build telecommunications networks.
“The release of hostage ZTE will be the start of China and the US to implement their trade agreements,” Hu Xijin (胡錫進), editor-in-chief of the Chinese state-backed Global Times tabloid, said on Twitter after news of the deal was reported.
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