U.S.-China Trade Talks Begin, ZTE Is In The Spotlight

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U.S.-China Trade Talks Begin, ZTE Is In The Spotlight

Postby seemslikeadream » Tue May 15, 2018 2:11 pm

As U.S.-China Trade Talks Begin, ZTE Is In The Spotlight

Anthony KuhnMay 15, 201812:00 PM ET

Chinese telecom giant ZTE said its major operations had "ceased" following last month's US ban on American sales of critical technology to the company,

When President Trump tweeted a pledge on Sunday to help save China's second-largest telecommunications firm because penalties imposed by the U.S. Commerce Department had cost too many Chinese jobs, many were left slack-jawed to hear such words coming from the "America First" president.

But the case of ZTE highlights the importance of high tech in the U.S.-China trade disputes, as well as how the two countries look at the role of government in the economy.

China's Foreign Ministry expressed its appreciation for Trump's gesture, which could help smooth crucial trade talks that start Tuesday as China's top economic official, Vice Premier Liu He, arrives in Washington to meet with Treasury Secretary Steve Mnuchin. The two sides have so far imposed or threatened each other with billions of dollars in tariffs and failed to significantly narrow their differences when Mnuchin led a delegation to Beijing earlier this month.

"The Chinese have suggested that ZTE was a show-stopper — if you kill this company, we're not going to be able to cooperate with you on anything," says Scott Kennedy, an expert on China's political economy at the Center for Strategic and International Studies in Washington, D.C.

And President Trump needs China's cooperation in ironing out the trade spat, not to mention North Korea and a host of other issues.

The ZTE case predates the current U.S.-China trade spat. In March 2017, the Commerce Department hit ZTE with a $1.2 billion penalty for violating U.S. sanctions on Iran and North Korea, and for misleading the U.S. government about the firm's actions.

ZTE was also slapped with a suspended seven-year ban on the purchase of U.S. tech products. That ban was activated last month after the U.S. found out that ZTE failed to come clean about its operations.

"ZTE made false statements to the U.S. government when they were originally caught," Commerce Secretary Wilbur Ross said in a statement last month. ZTE "made false statements during the reprieve it was given, and made false statements again during its probation."

ZTE announced May 9 that its operations had ground to a halt because it was unable to purchase the microchips it uses in its products from U.S. companies including the San Diego-based firm Qualcomm.

Chinese observers were despondent to find that one of their country's top companies, which sells network equipment and cell phones all over the world, is "hollow at its core" and reliant on the U.S. for its microchips.

"The U.S. is moving against ZTE because it wants to knock China out of its leading position in 5G mobile communication technology," fumed Hu Xijin, the editor of China's nationalist Global Times tabloid, in a post on the Weibo microblog platform. "Chinese society must support ZTE," he said (although some needled him for sending the post not from a ZTE smartphone, but an iPhone).

ZTE's situation convinced many Chinese that rather than being dependent on foreign suppliers, the country must manufacture key technology products itself. This notion is behind Beijing's industrial policy, known as "Made in China 2025." The policy involves subsidizing Chinese firms so they can dominate domestic markets for hi-tech products such as artificial intelligence and new energy vehicles.

The U.S. government sees the plan as a threat, and proposes to target it with tariffs on China's tech exports.

Douglas Fuller, an expert on China's tech policies at Zhejiang University in Hangzhou, says the U.S. could have taken smarter action against ZTE, without hurting U.S. producers that sell it products and "antagonizing China to double down on more techno-nationalist import substitution policies."

Those policies did not start with Made in China 2025. Beijing-based economist Hu Xingdou says China has practiced them to some extent for two or three decades. Their proponents can point not only to Asia's main economies as fellow practitioners, but also to a young U.S.

Hu notes that President Trump's "America First" economic nationalism harks back to the ideas of Alexander Hamilton, who argued in 1791 that free trade would work only "if the system of perfect liberty to industry and commerce were the prevailing system of nations." But as it was not, Hamilton contended, the U.S. should protect its industries with tariffs, while supporting them with "bounties" — government subsidies.

Hu believes President Trump may be willing to ease up on ZTE in order to protect the overall economic relationship.

"The U.S. still needs China," he says. "If the U.S. causes China's economy to collapse, it won't do the U.S. much good, and the U.S. will lose markets for its core technologies."

As for Chinese industry, for now, at least, it "is deeply integrated in global supply chains," observes Kennedy. And "China's economic success depends on continued connectivity to the global economy." But he concedes: "I guess there's a balance between needing that connectivity and wanting to reduce your vulnerability" to foreign blockades or reprisals.

He notes that China has so far been comfortable with importing large quantities of food, energy and other commodities, because buying them on international markets is less costly than self-sufficiency.

But high-tech products are another matter, Kennedy notes, as they are deeply associated with national security and military superiority. Both the U.S. and Chinese governments are suspicious that each others' chips and phones may contain "back doors," compromising the security of users' data.

Hu says some members of China's liberal minority worry that the country's security fears "could cause it to close itself off, over-emphasize self-sufficiency or even revert to the era of Chairman Mao."

But the majority in China sees things from a more nationalist perspective, Hu says, which the ZTE case has merely reinforced.
https://www.npr.org/sections/parallels/ ... -spotlight

Top intelligence official says Chinese ZTE cellphones pose security risk to U.S.
https://www.nbcnews.com/politics/congre ... sk-n874276

Did Trump blink on China to help ZTE, or his own business?
https://qz.com/1278297/donald-trumps-re ... companies/

China backs Trump project in Indonesia to tune of $500 million. Trump backs China with fix for ZTE, a company that has cheated on Iran and North Korea sanctions and poses a cyber threat to U.S.
Why Is trump Spouting Russian Propaganda?

Because he is a Russian asset with btw the nuclear codes.

Manafort & Gates pleaded guilty to Conspiracy Against the United States
Posts: 29013
Joined: Wed Apr 27, 2005 11:28 pm
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Re: U.S.-China Trade Talks Begin, ZTE Is In The Spotlight

Postby seemslikeadream » Wed May 16, 2018 7:26 am

Is China Straight-Up Bribing Donald Trump?

The president suddenly softens on a Chinese business after Beijing bankrolls a Trump Organization project.

Bess LevinMay 15, 2018 12:00 pm
Jonathan Ernst
When Donald Trump announced on Sunday night that he was riding to the rescue of Chinese electronics maker ZTE, more than a few people, including those who work for him, were shocked. For one thing, Trump has long-claimed that China “is raping us” through unfair trade practices, and stealing American jobs. For another, the U.S. and Beijing are currently locked in tense negotiations to avoid a protracted trade war, thanks to the president’s decision to slap Chinese imports with a vast array of tariffs. For yet another, just a month prior, Trump’s own Commerce Department had banned shipments of American technology to ZTE for seven years, saying that the company violated American sanctions against countries including Iran and North Korea and lied about punishing employees for doing so. As a result, ZTE halted major operating activities—an outcome you’d have expected to please the president, considering he’d just imposed aluminum and steel tariffs on “national security” grounds, and ZTE was threatening national security. So it was a bit odd to see Trump pull a complete 180, suddenly insisting that the company and its 75,000 Chinese jobs must be saved, though to be fair, tweeting “Look, China just pumped $500 million into a Trump Organization project so I had to do them a solid” might not have gone over so well.

Oh, that’s right—according to multiple news outlets, the president’s total about-face on China came just 72 hours after the developer of a theme park outside Jakarta, known as MNC Lido City, with whom the Trump Organization has an agreement to license its name, signed a deal to receive $500 million in Chinese government loans, in addition to another $500 million from government banks. According to Agence France-Presse, the Trump Organization will rake in almost $3.7 million in licensing and consulting payments from Lido, along with another project in Bali. The company will also earn management fees, and be “eligible for additional unspecified incentives.” (Upon entering the White House, Trump turned over day-to-day management of the family business to his sons Donny Jr. and Eric, but chose not to divest himself financially from the company.)

Of course, we can’t entirely be sure that the financial injection was the reason for Trump’s sudden soft spot for Chinese jobs. Other theories for the change of heart include the fact that the president knows he needs China’s help during next month’s North Korea summit; that the economic nationalists in the White House are losing ground to the free-traders like Larry Kudlow; and that Trump sees helping ZTE as a way to get a trade deal with China. (According to the Washington Post the Chinese government gave and the U.S. a list of economic and trade demands and bullet point 5 was “announce adjustment to the [ZTE] export ban.”) But we also know that this is a president for whom kissing the ring goes very, very far. “You do a good deal for him, he does a good deal for you. Quid pro quo,” Richard Painter, the White House ethics lawyer for George W. Bush, told HuffPost. “This appears to be yet another violation of the emoluments clause of the Constitution,” Painter added, referring to the prohibition against the president receiving payments from foreign governments.

The White House, naturally, isn’t commenting on any of this. “You’re asking about a private organization’s dealings that may have to do with a foreign government. It’s not something I can speak to,” Deputy Press Secretary Raj Shah said Monday when he was asked about the Lido City deal. Luckily for Trump, the Trump Organization can’t speak to questions involving the president, either. And so any ethics issues involving either Trump or the businesses putting money in his pocket necessarily disappear into a metaphysical black hole.

Robert Weissman, president of the advocacy group Public Citizen, called the turn of events “stunning.” “They perpetually find new things to surprise me,” he said. “The idea of the president intervening in a law-enforcement matter to satisfy a foreign government is extraordinary. And it’s extraordinary because it doesn’t happen. Opening that door threatens the integrity of all corporate law enforcement. The Chinese government seems to have figured out a way to manipulate President Trump,” Weissman added. “It’s exactly why this anti-bribery clause of the Constitution is common sense.” As Christopher Balding, an economics professor at Shenzhen’s HSBC Business School, told A.F.P., “Even if this deal is completely and entirely above board, it simply furthers the perception of impropriety” concerning Trump’s business dealings. “Especially with the potential trade war, this is not a good look . . . Critics will be entirely right to demand answers.” We’re sure the administration, whose motto is basically “We’re open for business, baby,” will get right on that.
https://www.vanityfair.com/news/2018/05 ... -trump-zte
Why Is trump Spouting Russian Propaganda?

Because he is a Russian asset with btw the nuclear codes.

Manafort & Gates pleaded guilty to Conspiracy Against the United States
Posts: 29013
Joined: Wed Apr 27, 2005 11:28 pm
Location: into the black
Blog: View Blog (83)

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