US lets ZTE resume some activity
NEW YORK/HONG KONG, July 4, (RTRS): China’s embattled ZTE Corp has received a temporary reprieve from the US government to conduct business needed to maintain existing networks and equipment as it works toward the lifting of a US supplier ban.
ZTE, which makes smartphones and networking gear, was forced to cease major operations in April after the United States slapped it with a supplier ban, saying it broke an agreement to discipline executives who conspired to evade US sanctions on Iran and North Korea.
The authorization seen by Reuters from the US Commerce Department’s Bureau of Industry and Services runs from July 2 until Aug 1.
It allows China’s No. 2 telecommunications equipment maker to continue operating existing networks and equipment and provide handset customer support for contracts signed before April 15. It also permits limited transfer of funds to or from ZTE.
On Tuesday, ZTE also announced the departure of 1 senior executive in a stock exchange filing, while a source who saw an internal memo told Reuters seven others were removed. As part of its settlement agreement reached in June with US authorities, ZTE had promised to radically overhaul its management.
The company also agreed to pay a $1 billion penalty and put $400 million in an escrow account as part of the deal to resume business with US suppliers — which provide almost a third of the components used in ZTE’s equipment. But the ministry issued a brief clarification in response. “The Chinese government’s position has been stated many times. We absolutely will not fire the first shot, and will not implement tariff measures ahead of the United States doing so,” it said, without elaborating.
Washington has said it would implement tariffs on $34 billion of Chinese imports on July 6, and Beijing has vowed to retaliate in kind on the same day.
Earlier, Chinese Foreign Ministry spokesman Lu Kang said China was ready to act, though he did not confirm the start date for Chinese tariffs.
“China has already made preparations,” Lu told a daily news briefing.
“As long as the United States issues a so-called tariff list, China will take necessary measures to firmly protect its legitimate interests,” he added, without elaborating.
China’s yuan rose sharply against the dollar on Wednesday, a day after the central bank assured markets it would keep the currency stable amid growing worries about trade friction, although stocks fell.
Chinese state media on Wednesday kept up a steady drum beat of criticism of the United States.
The official China Daily said the United States was intentionally trying to prevent China from developing to keep it from challenging the former’s role in the global economic order.
“The US has maintained hegemony in the military and financial fields for many decades. Now it is pursuing economic hegemony,” the English-language newspaper said in an editorial.
“It has frequently waged wars against other sovereign countries and made use of the dominant influence of the US dollar in the international markets to fleece other countries. Now it is attempting to resort to an all-out trade and economic war to hold back China’s normal development.”
Widely-read tabloid the Global Times, published by the ruling Communist Party’s People’s Daily, said the increasingly likely trade war would bring chaos to the world.
“Counterstrike is major economies’ first reaction to Washington’s trade war,” it said in its editorial.
“It’s hard to predict where these moves will lead the world, but Washington will unavoidably pay heavy prices for its attempts to change the whole world to its economic tributary.”
US President Donald Trump has threatened to escalate the trade conflict with tariffs on as much as $400 billion in Chinese goods if Beijing retaliates against the US tariffs set to take effect on Friday.
File photo shows a worker handling red hot steel cables at a steel factory in Qingdao in China’s eastern Shandong province. Simmering trade tensions between the world’s top two economies are set to erupt into a full-blown trade
war on July 6, with Washington poised to impose new tariffs on $34 billion in Chinese goods. (AFP)
ZTE said in exchange filings late on Tuesday that Xu Weiyan, a shareholders’ representative supervisor in the company’s supervisory committee, has resigned due to personal commitments with immediate effect and no longer holds any position in the company.
An insider source told Reuters a memo was sent out on Tuesday announcing the removal of seven other executives, without providing a reason. They included vice presidents Wang Keyou, Xie Jiepeng and Ma Jie, who were in charge of the legal, finance and supply chain departments, respectively.
Reuters could not immediately contact them for comment. The source declined to be identified due to the sensitivity of the matter.