China, US Agree on Outline to Resolve ZTE Ban, WSJ Reports

by Leon Thompson May 23, 2018, 0:10
China, US Agree on Outline to Resolve ZTE Ban, WSJ Reports

Trump agreed to allow ZTE to stay in business, and the United States and China struck a deal to drop their tariff threats while they worked on a wider trade agreement, Mnuchin said on Sunday.

A vague statement the two countries released said next to nothing about the issue at the heart of the dispute between Washington and Beijing: The hardball tactics China uses to challenge USA technological supremacy.

Threatened U.S. restrictions on Chinese investments in the United States also appeared to be put on the back burner.

FILE PHOTO: Containers are seen at the Yangshan Deep Water Port in Shanghai, China April 24, 2018.

Asked about the administration's evolving China trade strategy, several Republicans said the White House needed to fill them in on what was happening, as majority had only heard and read media reports about the developing talks over the weekend. An 2017 agreement called for it to pay as much as $1.2 billion and penalize the workers involved, in what was the largest criminal fine for the U.S. Justice Department in an export control or sanctions case.

"The Trump administration seems eager to engineer at minimum a temporary peace with China to ensure a smooth run-up to the Kim-Trump summit in June", Cornell University economist Eswar Prasad said, referring to the June 12 meeting scheduled between President Donald Trump and North Korean leader Kim Jong Un. The Shenzhen, China-based company, which employs about 75,000 people, depends on US components, such as chips from Qualcomm Inc.

One person told Reuters there was a "handshake deal" on ZTE between U.S. Treasury Secretary Steven Mnuchin and Chinese Vice Premier Liu He during talks in Washington last week that would remove the U.S. Commerce Department's ban on American companies selling to ZTE in exchange for the purchase of more U.S. agricultural products.

Lawmakers urge Trump administration to clarify strategy on China after trade war pause
US reportedly working with China on a deal to 'save' ZTE from going out of business

Since the meetings concluded, the Trump administration has appeared to offer mixed messages about the status of the discussions and whether China had actually agreed to buy an additional $200 billion of USA products to reduce the trade deficit, as administration officials had previously indicated.

The Dow Jones Industrial index moved higher in afternoon trade Monday, adding 314 points to trade above 25,000 for the first time since March.

Treasury Secretary Mnuchin predicted a big increase - 35 percent to 45 percent this year alone - in farm sales to China and a doubling in sales of energy products to the Chinese market.

But others were quick to point out how the country had successfully defended its interests. Mnuchin is "promising to win something already happening. the U.S.is folding again". "Instead, it stood firm and continually expressed its willingness to talk", the English-language newspaper said in an editorial.

"As trade tensions settle and peak growth/earnings anxieties subside, the clouds are lifting for stocks", JPMorgan analysts said in a note. The U.S. has long accused Beijing of secretly stealing U.S. technology from American businesses. The president said "too many jobs in China" had been lost, marking an about-face in his criticism of China's trade practices.

The market is also weighing the possibility of additional USA sanctions on the country.

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