You are here

Why Trump is backing a banned company and Chinese jobs

His tweet in support of rule-breaking ZTE points to upcoming moves in Pyongyang, Singapore and Oslo

BT_20180515_ATTWEET15_3435865.jpg
If ZTE were to fail, thousands of top engineers would be unemployed and ripe for the picking by China's vast technology sector, surveillance companies and the military. This would pose a challenge to American tech companies and US national interests

US PRESIDENT Donald Trump's sudden concern over Chinese jobs may indicate a realisation that neither a failed nor a nationalised Chinese telecoms equipment maker would be in America's best interests.

It may also indicate just how important his Singapore meeting with Kim Jong Un really is.

To recap: ZTE Corp is a Chinese company that makes telecoms equipment and mobile phones. It previously broke a US embargo on Iran by using American chips in equipment it sold to the Middle Eastern country.

The Commerce Department found out.

sentifi.com

Market voices on:

ZTE agreed to pay a fine and punish employees in return for the US allowing it to keep buying American chips. ZTE paid the fine, but didn't follow through on the punishment.

The Commerce Department found out.

ZTE was banned from buying US chips for seven years. Unable to make its equipment without American technology, ZTE halted operations last week.

Mr Trump found out.

For reasons that are the subject of speculation by political analysts and the Twitterati, Mr Trump  announced his support for ZTE and foreshadowed a way to get the firm back on track.

Note this part:  "Too many jobs in China lost. Commerce Department has been instructed to get it done!"

If ZTE were to fail, thousands of the nation's top engineers would be unemployed and ripe for the picking by China's vast technology sector including network equipment makers, surveillance companies, and the military.

A ZTE diaspora could conceivably seed dozens of startups that would challenge American competitors and US national interests.

Alternatively, ZTE could be de-facto nationalised via a Team China strategy. This would be an even bigger challenge to US interests, because such an entity would be as formidable as Huawei Technologies.

Maybe none of this was on Mr Trump's mind when he penned that ZTE tweet, which spurred a handful of Asian suppliers to rebound in early trading on Monday.

It's possible his mind was on Singapore, and the upcoming meeting with Mr Kim.

Mr Trump is considered by some - but not by all South Koreans - to be instrumental in getting the presidents of the North and South together for a handshake and photo op last month.

Peace on the Korean peninsula and with the US would be a good thing, and a denuclearised North Korea is a necessary part of that. There's even talk of a Nobel Peace Prize for Mr Trump. After all, the Norwegian Nobel Committee awarded Barack Obama one just for getting elected on a platform of hope and change.

If Pyongyang is to agree to give up nuclear weapons - and pave the way for some kind of deal with Washington - Mr Kim will need reassurance from Beijing that both his person and his country will be safe.

Mr Trump knows this. Mr Xi knows that Trump knows this.

But Mr Xi won't tolerate Americans messing with Chinese strategic interests, including the pursuit of technology independence.

Enter ZTE, those Chinese jobs, and maybe an invitation to Oslo. BLOOMBERG