SEVERE WX : Heat Advisory View Alerts
STREAMING NOW: Watch Now

Skepticism and backlash follow US deal with China's ZTE

The Trump administration's highly...

Posted: Jun 8, 2018 9:17 AM
Updated: Jun 8, 2018 9:17 AM

The Trump administration's highly unusual deal to save a giant Chinese tech company is drawing deep skepticism.

The United States had banned ZTE, a state-controlled Chinese smartphone maker, from buying American parts, saying it breached a 2017 deal in which it admitted to violating sanctions on Iran and North Korea.

That ban, which threatened to put the company out of business, will be lifted under the deal announced Thursday. ZTE will pay a $1 billion fine and change its entire corporate leadership.

Most unusual, though, is a provision that will allow a US-appointed oversight team to keep tabs on the company from the inside. That arrangement took experts on Chinese business by surprise, and some questioned how it could work.

"That to me seems like an aspirational goal," said Scott Kennedy, director of the Project on Chinese Business and Political Economy at the Center for Strategic and International Studies. "I can see this one getting dragged out."

Kennedy expects the Chinese government to keep negotiating that part of the deal. And he said he believes the United States may drop the provision altogether rather than get locked in a prolonged battle over it.

Derek Scissors, a resident scholar at the American Enterprise Institute, a Washington think tank, said that even if compliance officers were allowed into ZTE, they wouldn't prevent China from violating sanctions.

Chinese officials "will just set up another company to break sanctions," he said. Compliance officers "will accomplish nothing."

Related: US cuts a deal with Chinese smartphone maker ZTE

The deal requires ZTE to put $400 million in escrow. If ZTE violates the terms, it will forfeit the money, and the ban will resume.

ZTE hasn't yet commented on the deal.

The management changes have to be completed in 30 days. But for state-controlled wireless companies in particular, "rotating the top management team is not news," said Minyuan Zhao, an associate management professor at Wharton's Center for the Study of Contemporary China.

"Having a foreign compliance officer is definitely news," she said.

In Congress, the deal met a backlash from members of both parties, and some vowed to try to block it.

Republican Senator Tom Cotton of Arkansas and Democratic Senators Chris Van Hollen of Maryland and Chuck Schumer of New York introduced an amendment to the National Defense Authorization Act that would stop the president from offering ZTE a deal.

"ZTE has flagrantly and repeatedly violated US laws," Van Hollen said in a statement. "Any deal to let them off the hook should not move forward."

Commerce Secretary Wilbur Ross celebrated the deal and pledged that it would impose "the most strict compliance that we've ever had on any company, American or foreign."

"Prior administrations have been real patsies for the Chinese and for other countries. They've never really pushed back," he told CNBC. "So I think the Chinese are well aware there's a new marshal in town, and it's called Donald J. Trump, and he's a very, very good shot."

Still, some experts wondered what the United States will get out of the deal.

One possibility is that China will finally approve Qualcomm's $44 billion purchase of the Dutch company NXP Semiconductors, said Samm Sacks, a senior fellow in the Technology Policy Program at the Center for Strategic and International Studies.

Related: What is ZTE, and why does the US think it's a national security threat?

The fate of ZTE has become a flashpoint in trade tensions with China as the United States readies tariffs on $50 billion in Chinese goods. The United States is expected to announce the details of those tariffs next week.

Ross insisted that ZTE deal was an enforcement matter, separate from trade.

David Dollar, a China expert at the Brookings Institution, said the ZTE deal was an unorthodox way to correct an overly harsh punishment.

"It's probably good that we've reached a compromise," he said. "But it is a bad precedent" to use a regulatory matter as a negotiations tool.

"The main thing the US is getting out of this is generating some goodwill" with China, he said.

Minnesota Coronavirus Cases

Data is updated nightly.

Confirmed Cases: 39133

Reported Deaths: 1514
CountyConfirmedDeaths
Hennepin12597787
Ramsey4963229
Dakota242192
Stearns241419
Anoka2266109
Nobles16726
Olmsted114715
Washington113740
Mower9602
Rice8488
Scott7624
Clay59138
Kandiyohi5781
Blue Earth4942
Wright4835
Todd4012
Carver3951
Lyon3272
Sherburne3255
Freeborn2970
Watonwan2380
Steele2371
Benton2203
St. Louis19615
Nicollet17312
Martin1715
Cottonwood1360
Goodhue1318
Winona12915
Crow Wing10812
Le Sueur1081
Pine1070
Chisago1021
Otter Tail1001
McLeod920
Dodge880
Carlton870
Unassigned8537
Polk822
Chippewa791
Isanti750
Waseca710
Douglas650
Murray650
Itasca6412
Meeker611
Morrison611
Faribault600
Pipestone592
Becker570
Jackson550
Sibley542
Pennington520
Renville362
Beltrami340
Brown342
Mille Lacs342
Wabasha330
Rock310
Fillmore300
Yellow Medicine300
Houston270
Swift221
Wilkin213
Norman200
Redwood190
Koochiching181
Grant170
Roseau170
Cass162
Aitkin150
Big Stone150
Kanabec151
Wadena150
Marshall120
Pope120
Lincoln100
Mahnomen101
Clearwater90
Hubbard80
Lake60
Stevens50
Traverse50
Lac qui Parle40
Red Lake40
Kittson20
Cook10
Lake of the Woods00

Iowa Coronavirus Cases

Data is updated nightly.

Confirmed Cases: 32064

Reported Deaths: 731
CountyConfirmedDeaths
Polk6739181
Woodbury326044
Black Hawk232358
Buena Vista171911
Johnson13408
Linn130482
Dallas129129
Marshall106019
Scott84510
Story8063
Pottawattamie74512
Dubuque74222
Wapello70830
Crawford6783
Muscatine64944
Sioux4810
Tama46829
Wright3851
Louisa36313
Jasper32517
Plymouth3245
Warren2911
Dickinson2663
Webster2484
Washington2459
Cerro Gordo1901
Hamilton1891
Boone1501
Clay1370
Allamakee1334
Clarke1333
Mahaska11717
Shelby1170
Clinton1131
Poweshiek1078
Carroll991
Pocahontas981
Bremer957
Franklin950
Des Moines912
Emmet870
Henry863
Cedar851
Hardin810
Taylor800
Monona770
Cherokee761
Floyd732
Marion710
Benton681
Guthrie684
Jones640
Sac640
Jefferson620
Osceola620
Buchanan601
Butler592
Hancock551
Humboldt551
Calhoun542
Harrison540
Lee542
Iowa530
Delaware511
Monroe517
Fayette500
Madison482
Lyon450
Clayton443
Davis411
Mitchell410
Palo Alto410
Grundy400
Mills390
Winneshiek390
Kossuth360
Howard340
Jackson340
Union340
Lucas314
Chickasaw290
Greene290
Winnebago290
Cass240
Ida230
Appanoose213
Keokuk211
Van Buren210
Page200
Worth200
Adair160
Audubon161
Unassigned160
Ringgold150
Decatur120
Montgomery102
Wayne100
Adams80
Fremont80
Rochester
Few Clouds
90° wxIcon
Hi: 90° Lo: 70°
Feels Like: 96°
Mason City
Few Clouds
93° wxIcon
Hi: 93° Lo: 71°
Feels Like: 100°
Albert Lea
Scattered Clouds
91° wxIcon
Hi: 92° Lo: 71°
Feels Like: 97°
Austin
Scattered Clouds
90° wxIcon
Hi: 93° Lo: 71°
Feels Like: 98°
Charles City
Clear
91° wxIcon
Hi: 92° Lo: 72°
Feels Like: 98°
Heat Advisory in effect until 7pm
KIMT Radar
KIMT Eye in the sky

Latest Video

Image

Free masks in Rochester

Image

Boys & Girls Club back open

Image

Rochester Elementary School releases plans

Image

Working in the heat

Image

Potential job cuts for Austin city employees

Image

Free memory screenings being offered during pandemic

Image

1K Mile March: Alabama to Minneapolis

Image

Changes being considered to city fireworks ordinance

Image

'Look Before you Lock' Initiative

Image

Dave's Noon Weather 7/8

Community Events