The Trump administration is closing in on a deal to ease sanctions on Chinese tech giant ZTE

Joe Raedle/Getty ImagesA cell phone manufactured by ZTE, China’s number-two smartphone maker, is seen on a store shelf.

  • The Trump administration is reportedly nearing a new deal to ease sanctions on Chinese telecom giant ZTE.
  • The deal would force ZTE to make major changes to its executive team and board of directors.
  • It may also include significant fines.
  • The new agreement comes after a back-and-forth between the Trump administration and the Chinese government on a way to ease the crackdown on ZTE.

The Trump administration and Chinese government are closing in on a revised deal to lift sanctions on Chinese telecom equipment maker ZTE after a US crackdown crippled the tech giant.

According to The Wall Street Journal, the US would lift restrictions that limit ZTE’s ability to purchase US phone parts in exchange for a major shake-up at China’s second-largest phone maker.

To lift the sanctions, the Journal reported that ZTE would be required to make personnel changes on their executive team and board of directors. It would also be subject to significant fines.

Larry Kudlow, Trump’s top economic adviser, referenced said during a CNBC interview Monday that ZTE wouldn’t get off “scot-free” due to their multiple violations of US law. He said any potential deal could include “significant fines, very severe compliance measures, a new board of directors, a new management team.”

Treasury Secretary Steven Mnuchin also emphasised during a separate CNBC appearance that the US was not trying to put ZTE out of business – and that the administration was exploring alternate remedies with the Chinese government.

The deal would come after nearly two weeks of back and forth between the Trump administration and the Chinese government over the company.

The Commerce Department slapped sanctions on ZTE after determining the company sold goods containing US parts into Iran and North Korea, a violation of US sanctions against those two countries. The Commerce Department determined ZTE did not comply with subsequent demands after the initial violation.

Due to the telecom company’s reliance on US parts, ZTE’s production ground to a halt.

Given its importance to the Chinese tech sector, President Xi Jinping government pleaded with Trump to reverse course. Trump tweeted that the US would ease the sanctions on May 13.

Trump made the ZTE deal seem like part of the trade negotiations that resulted in a separate agreement on Saturday, specifically referencing the need to save Chinese jobs. Additionally, multiple reports indicated that Trump was prepared to swap an end to the ZTE crackdown for lower Chinese tariffs on US agricultural products like pork and wine.

But other administration officials stressed that the ZTE consideration was a national security issue and not part of the larger trade discussions. Trump also eased off his ZTE talk after backlash from Republicans and national security officials.

Trump’s tweets on ZTE came just days after the Chinese government gave $US500 million worth of loans to an Indonesian development partnering with the Trump Organisation. The timing of the ZTE decision and loans raised eyebrows among ethics experts.

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