Trump brings relief, uncertainty to China’s ZTE

A sense of relief mixed with determination at ZTE Corp.’s China offices Monday after U.S. President Donald Trump appeared to rescue the company with a single Twitter post.

China’s No. 2 telecommunications-equipment maker had ceased most operations after the U.S. imposed a seven-year ban on its ability to buy technology from American suppliers. But Trump, in a stunning reversal, posted on Twitter that he and Chinese leader Xi Jinping are working together to give ZTE “a way to get back into business, fast.” He added that he had asked his Commerce Department to “get it done” because of concern over jobs in China.

“It’s a surprise to see Trump tweeted about this,” said Kevin Lin, an engineer working at ZTE’s research and development center in Beijing. “It’s definitely good news.”

Workers at the Beijing location streamed into the office Monday through a small door at the back of the building as its lobby was sealed off for renovation. Twitter is banned in China, but Lin said “almost every one” of his colleagues had posted about the news on WeChat, the country’s most popular messaging service. Most workers declined to talk with a reporter on site.

Still, it’s not clear what lies ahead for ZTE. Trump didn’t explain what steps the U.S. would now take to alleviate the ban and the White House later explained that the U.S. Commerce Department, which had imposed the penalty, would ultimately decide how to handle the ZTE restrictions.

ZTE faces two likely scenarios, according to analysts Edison Lee and Timothy Chau at Jefferies: Commerce may conclude ZTE’s violation is a careless mistake and will lift the ban without additional penalty or the U.S. agency will suspend the ban temporarily subject to further investigations and negotiations. Lee and Chau said the second scenario is much more likely, which means ZTE may struggle to sign up new business because of the uncertainty over its future.