ZTE ban lifted as China ponders next trade war move

Reuters Studio - July 12, 2018

Hong Kong shares of ZTE Corp have surged nearly 24 percent after China's No.

2 telecommunications equipment maker cleared the last hurdle to lifting a U.S. ban on component supplies.

As Thuy Ong reports, it comes as China said foreign firms operating in China would suffer in a trade war, urging U.S. companies to lobby their government to protect their interests

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ZTE ban lifted as China ponders next trade war move

Chinese equipment maker ZTE has received a reprieve.

After a three-month ban, the company has reached an agreement with the US, to resume operations in the country.

ZTE's activities were halted after it pleaded guilty to illegally shipping US goods to Iran last year, violating sanctions.

(SOUNDBITE) (English) CIBC, HEAD OF FX STRATEGY, JEREMY STRETCH, SAYING: "ZTE has been one of the sort of the lightning rods for concerns about China and its use of technology or its potential breaching of sanctions.

Clearly we have seen the company come back from the brink." The US Commerce department says the ban will be lifted once ZTE deposits $400 million into an escrow account, as part of a $1.4 billion settlement ZTE reached last month.

Shares in the company soared 24 percent after news of the ban lift Asian shares also recovered some of the ground they lost on Wednesday, after Trump threatened 10 percent tariffs on $200 billion of Chinese goods China has yet to respond, but warned that foreign firms operating in the country would suffer.

(SOUNDBITE) (Mandarin) CHINA'S COMMERCE MINISTRY SPOKESMAN GAO FENG, SAYING: "China has already stated many times a prerequisite for negotiations is trust.

Based on my current understanding of the situation at present the two sides are yet have been in touch over resuming discussions." Some think China would be better off avoiding a tit-for-tat approach.

(SOUNDBITE) (English) CIBC, HEAD OF FX STRATEGY, JEREMY STRETCH, SAYING: "If the Chinese were to liberalize or further open up their markets that would provide a more you know sort of prescriptive playing field which perhaps would alleviate some of these trade concerns." One survey found US businesses operating in China oppose the use of tariffs due to challenges they face.

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