China’s ZTE will live, thanks to a deal with the U.S. government

China’s ZTE will live, thanks to a deal with the U.S. government

Today a U.S. Commerce Department spokesman said that an agreement is pending between the United States and ZTE that would see ZTE pay a hefty fine and in exchange be allowed to purchase crucial components again.

The company will pay a $1 billion fine and fund a new in-house compliance team staffed by USA experts, Ross told CNBC. The U.S. threatened sanctions, but ZTE promised to change its practices and punish the executives responsible for its misconduct.

Reviving ZTE has been a personal focus for President Trump, whose government is in the middle of broader trade negotiations with the Chinese government.

Shares of USA companies that do business with ZTE rose on Thursday.

The U.S. and China are in a race to build the first 5G network, in part because it means jobs.

The penalties are in addition to the $892 million in penalties ZTE already paid.

The move was a direct result of ZTE selling to Iran and North Korea in direct violation of an April 2017 agreement that had ZTE promise to not sell to the aforementioned countries.

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The agreement does not take effect until ZTE pays the $1 billion fine and puts the $400 million in escrow, which is likely to take at least a few days, according to a person familiar with the matter.

Several U.S. chipmakers, including Qualcomm and Intel, count ZTE as a customer.

The company will pay a $1 billion fine and agree to establish and pay for an in-house compliance team staffed by US experts, Ross told CNBC.

According to a report from Reuters, ZTE has reached a deal with usa authorities that would lift a ban that prevents it from buying parts from U.S. suppliers. Nonetheless, Chinese trade officials have made reaching a deal on ZTE a major priority and news of the agreement may ease some of the tensions between the two countries.

Last month a source familiar with the talks said that the Trump administration had struck an agreement with ZTE. Both companies' share prices rose Thursday, with NXP up more than 6 percent in midday trading.

A sign of ZTE Corp is pictured at its service centre in Hangzhou, Zhejiang province, China May 14, 2018. But the Trump administration is pressuring China to make trade concessions.

ZTE did not immediately respond to requests for comment. "Export control and sanctions laws should not be negotiable, because fidelity to the rule of law is a key part of what distinguishes the US from a country like China that is ruled by a Communist dictatorship".

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