US begins temporarily lifting partial ban on ZTE

ZTE Limited Service Authorization

The Trump administration is letting ZTE Corp. resume some business activities while the U.S. weighs ending a seven-year ban on the Chinese telecommunications company, according to a document obtained by Bloomberg News.

The ZTE authorization by the Commerce Department’s Bureau of Industry and Security is valid from July 2 until Aug. 1. While it wasn’t immediately clear when a permanent order will follow, a person familiar with the matter said ZTE is expected to be in compliance with U.S. demands by Aug. 1.

ZTE’s stock surged its 10 percent daily limit in Shenzhen on Tuesday, the biggest jump in more than a year. Its shares in Hong Kong rose 7.6 percent.

The authorization permits China’s No. 2 maker of telecoms gear to support existing networks or equipment under contracts signed on or before April 15, when the U.S. blocked companies from selling components to ZTE for violating sanctions against Iran and North Korea. The ban had forced ZTE to announce it was shutting down.

President Donald Trump reversed course in May, saying he was reconsidering penalties on ZTE as personal favor to Chinese President Xi Jinping. Later that month, the Trump administration announced it would allow the company to stay in business after paying a $1.3 billion fine, changing its management and providing “high-level security guarantees.”

Putting additional drama over all of this is the fact that President Trump decided to get personally involved and push for the US to cut a deal with ZTE to get its business going again. Despite that, many Republicans (and Democrats, too) seem wary of ZTE and other Chinese telecom companies, like Huawei, and view them as potential security threats due. Some Republican Senators immediately pushed back on the deal — leading to the vote mentioned above — and the Federal Communications Commission is even considering an item that would limit purchases of equipment from companies that pose a “national security risk,” which is really just their way of saying “Huawei and ZTE.”

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