Trump u-turn on ZTE ban catches markets by surprise
US President Donald Trump caught markets unaware again on Monday after he ordered the US Commerce Department to help Chinese telecoms company ZTE after almost putting it under.
Trump said he was working with his Chinese counterpart Xi Jinping to help ZTE “get back into business, fast”.
ZTE ceased production after US companies were banned from supplying the mobile phone maker when it was found to have illegally sent products to Iran and North Korea.
Chinese smartphone makers such as ZTE still rely on American-designed chips from the likes of Qualcomm and Intel in the manufacture of their products.
Trump's u-turn was welcomed by Chinese officials.
"We greatly appreciate the positive position of the US on the ZTE issue and are in close communication with the US on the details of the issue," China foreign ministry spokesman Lu Kang said.
Former Obama administration aide Kevin Wolf, who was in charge of the launch of the case against ZTE, said he was “speechless”.
“I’m highly confident that a [US] president has never intervened in a law-enforcement matter like this before . . . It’s so outside the way the rules were set up,” he said.
The move from Trump was read by many market watchers as a concession from the US ahead of the second round of US-China trade negotiations later in the week.
“While some might be unsettled at prospects of trade confrontation, we would argue that the US is acting as a rational actor,” noted Mizuho Bank strategist Chang Wei Liang.
“And rational US behaviour would almost certainly mean that the administration would not choose a mutually destructive trade outcome.”