Lawmakers stunned by Trump push to help Chinese company

President Trump’s abrupt decision to offer a potential lifeline to Chinese phone-maker ZTE is sending shockwaves through Washington, sparking criticism from lawmakers who have pushed for tighter restrictions on Chinese telecommunications companies.

Trump stunned Republicans and Democrats on Sunday when he tweeted that he had ordered federal officials to get Chinese phone-maker ZTE “back into business, fast” after the company shuttered its operations due to U.S. penalties.

“Too many jobs in China lost,” Trump wrote.

The sentiment was a far cry from the hard line the president has drawn on China since the start of his administration, with his officials accusing Beijing of unfair trade practices and intellectual property theft.

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Republicans on Capitol Hill, who had been pressing for further restrictions on Chinese telecommunications companies in the U.S. market, pushed the administration to hold the line it had previously taken against ZTE.

“Problem with ZTE isn’t jobs & trade, it’s national security & espionage,” Sen. Marco Rubio (R-Fla.) tweeted on Monday. “We are crazy to allow them to operate in U.S. without tighter restrictions.”

“One of the few areas where the president and I agreed, and I was vocally supportive, was his approach towards China,” Senate Minority Leader Charles Schumer (D-N.Y.) said in a statement. “But even here he is backing off, and his policy is now designed to achieve one goal: make China great again.”

Trump’s stated desire to help ZTE comes less than a month after his Commerce Department barred American firms from selling components to the Chinese phone-maker. The administration said ZTE violated sanctions on Iran by selling equipment to the country.

ZTE is fighting the ban, which, if it stands, promises to cripple the company’s operations. The company has already halted its production in reaction to the penalties.

The Chinese company has called Commerce’s punishment excessive and unfair, saying that it ignores its continued efforts at sanction compliance and the punishment that it has doled out to employees involved in the sanctions violations. ZTE has also maintained that it operates in accordance with U.S. law in reaction to charges that it works with the Chinese government to spy on Americans.

With his tweet, Trump signaled that his administration is willing to ease the ban if it receives concessions from China in trade talks. Chinese officials are expected to descend on Washington later this week for more negotiations.

Some experts were critical of Trump’s reversal.

“That’s the most insane political thing I have ever seen,” said Derek Scissors, a resident scholar at the American Enterprise Institute, referring to Trump’s statement about Chinese jobs. “That’s opening the door to saying we will not enforce American law to any Chinese firm that matters.”

The administration has offered few details about the discussions with Beijing involving ZTE. A White House spokeswoman said Trump “expects [Commerce] Secretary [Wilbur] Ross to exercise his independent judgment, consistent with applicable laws and regulations, to resolve the regulatory action involving ZTE based on its facts.”

The president defended himself amid criticism on Monday, suggesting that relieving the ban would benefit American businesses. He tweeted that ZTE “buys a big percentage of individual parts from U.S. companies.”

 

The Wall Street Journal reported that U.S. and Chinese officials are working through a deal that would relax the ban on ZTE in exchange for China lifting tariffs on billions in U.S. agricultural products. Those tariffs were issued in retaliation for proposed U.S. tariffs on Chinese goods.

Beyond the trade talks, the U.S. is also looking to secure China’s cooperation in pressuring North Korea to give up its nuclear program. Trump and Kim Jong Un, Pyongyang’s leader, are set for a high-stakes summit in June that the White House hopes will result in a deal for denuclearization.

White House spokesman Raj Shah said Monday that Chinese officials had raised the sanctions on ZTE “at various levels” and as part of bilateral talks “on a number of issues,” beyond just trade.

Experts like Dean Cheng, a researcher at the Heritage Foundation, said the discussions about ZTE could be a part of the negotiations over how to handle North Korea.

“It may be that President Trump has in mind additional Chinese pressures on North Korea and [sustaining previous sanctions],” said Cheng. “Or it could be that he is negotiating something significantly bigger in the overall trade arena.”

ZTE, a private firm, and other Chinese telecom companies have long faced suspicion that the Chinese government could use their products for espionage.

In February, top U.S. intelligence officials signaled publicly that they would not recommend that U.S. citizens use devices produced by ZTE or Huawei.

“We’re deeply concerned about the risks of allowing any company or entity that is beholden to foreign governments that don’t share our values to gain positions of power inside our telecommunications networks,” said FBI Director Christopher Wray before the Senate Intelligence Committee.

The Trump administration has taken steps to place restrictions on Chinese companies operating in the United States, including ZTE, over security concerns.

Earlier this month, the Pentagon ordered retail stores on military bases to stop selling devices produced by Huawei and ZTE on the grounds they “may pose an unacceptable risk to Department’s personnel, information and mission.” The administration has also moved to twice block Chinese firms from acquiring U.S. companies.

Some critics raised the security concerns when slamming the president for his tweets on Sunday.

“Our intelligence agencies have warned that ZTE technology and phones pose a major cyber security threat. You should care more about our national security than Chinese jobs,” said the House Intelligence Committee’s top Democrat, Adam Schiff (Calif.).

The president does have some defenders.

Rob Atkinson, president of the technology-focused think tank the Information Technology and Innovation Foundation, said lawmaker concerns are misplaced and that Trump is actually on the right track.

“I think everybody is overreacting to this,” he said on Monday. “It wasn’t like [American companies] are selling [China] parts for supercomputers. They’re selling them cellphones. I don’t see what the big deal is.”

In Atkinson’s view, Trump is ceding a small bit of ground to China by helping ZTE, potentially in exchange for things that could benefit America’s own economy.

“If you can use this as a lever to get some concessions from the Chinese, why in god’s name wouldn’t you do that,” Atkinson said. “We don’t have a lot of levers to do that anymore.”