US ZTE move viewed with caution
Temporary reprieve positive, but doubts remain: experts
Chinese experts on Wednesday urged caution following a decision by the US to temporarily allow embattled Chinese telecom firm ZTE Corp to restart some businesses in the US, saying that the move might not be significant either for the company or for strained trade relations between China and the US.
However, coming just days before the two countries are scheduled to impose tariffs on each other, the move sent a rare positive signal that there might still be room for negotiations, some experts noted.
The US Department of Commerce, in a statement dated July 2, announced that it would allow ZTE to restart business operations necessary for providing maintenance for its existing networks and customer support for contracts signed before April 15. The US in April barred its companies from supplying key parts for ZTE, after it accused the company of trying to get around US sanctions on Iran and North Korea.
“On the surface, this is a positive step. But in reality, this is a tactic from the US to trick China into offering concessions,” said Bai Ming, a research fellow at the Chinese Academy of International Trade and Economic Cooperation.
Insincerity
The temporary reprieve for ZTE only lasts until August 2 and the Chinese company is still barred from signing new contracts with US suppliers, according to the statement.
“This is an old trick often deployed by [US President Donald] Trump to offer small, temporary promises that can easily be reversed later to get big, long-term benefits from others,” Bai said, pointing to Trump’s decision to temporarily exempt the EU and other allies from steel and aluminum tariffs, only to change his mind later.
“The US is treating others like children, saying ‘I will give you candy, if you listen to me,’” Bai said.
Fu Liang, an independent Chinese telecom industry expert based in Beijing, said that the US move was made in the interests of its citizens who are customers of ZTE rather than fulfilling its promises after ZTE had done “all that it was ordered to do under the settlement between the two sides.”
ZTE recently reached a settlement with the US, under which it agreed to pay a $1 billion penalty and put $400 million in an escrow account, as well as replacing its entire senior management team in exchange for the US lifting the ban.
ZTE has replaced several executives in recent days and has paid the $1 billion penalty, according to media reports.
“The US now needs to make good on its promises under the settlement to lift the ban on ZTE,” Fu told the Global Times, adding that the temporary move “basically means nothing” in terms of helping the company out of its troubles.
However, the US move could represent a positive sign in the wider context of China-US trade tensions, experts noted.
“Under the current circumstances, any forward-looking and positive sign should be seen positively because there is so much pessimism about the China-US relationship right now,” said Li Yong, a senior research fellow at the China Association of International Trade under the Ministry of Commerce.
Fu also noted that for ZTE, the US move is a positive step. “The future still looks dim for ZTE, but at least there is something positive going on,” he said.
“On the surface, this is a positive step. But in reality, this is a tactic from the US to trick China into offering concessions.” Bai Ming Research fellow at the Chinese Academy of International Trade and Economic Cooperation