Chinese Telecom Giant ZTE Resumes Trading, Drops 39% After Deal With US

Senate to include measure blocking Trump's ZTE deal in defense bill

This bill is usually passed easily with support from both sides of the aisle. It would also ban US government agencies from purchasing any devices or services from ZTE or Huawei, another major Chinese telecom firm, or using government loans to subsidize any subsidiaries or affiliates of the two companies. The ban would essentially cripple ZTE to the point of potential bankruptcy.

But Trump then announced in mid-May that he was working with Chinese President Xi Jinping to find a way to get ZTE back into business.

As the Senate prepares to vote on a bill that could jeopardize President Trump's deal with Chinese company ZTE, White House official Mercedes Schlapp said the White House will watch closely to see what the Senate does before it makes any decisions.

Perdue asked for unanimous consent to strip the section of the National Defense Authorization Act (NDAA) that would keep the penalties against ZTE in place, arguing blocking the deal would undercut Trump's ability to negotiate.

ZTE is back in business: What now?

The ban that brought the Chinese vendor to its knees was reversed by USA president Donald Trump as a favour to Chinese president Xi Jinping. It's a stunning turnaround, though it had been signalled for some weeks.

Senate Democrats and Republicans don't often work together.

Last week, ZTE came to an agreement with the US Commerce Department that will lift a ban that prevents it from buying parts from US suppliers. Senators on both sides of the aisle criticized Trump for calling on the Commerce Department to reverse its position, with many saying ZTE poses a risk to United States national security.

Experts say the company faces challenges in getting its factories up and running again while also overhauling its management to meet the terms of the USA deal.

But the bipartisan senate amendment, which has been added to the must-pass National Defense Authorization Act, would essentially kill that agreement by retroactively reinstating financial penalties and continuing the prohibition on ZTE's ability to sell to the USA government.

ZTE has more than a dozen senior vice presidents, which is a level below executive vice president, said the company source who declined to be identified as they were not authorized to speak to the media. "For me, it was more than that".

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