Trump Backs Down On China Threat: Instructs Commerce Dept To Rescue ZTE

It appears the impact of "unintended consequences" has hit the Trump administration once again. Following the 'rescue' of Rusal - driven almost into the ground by Trump's aluminum tariffs and oligarch sanctions (which sent aluminum prices skyrocketing, crushing margins for end-users); it appears China's threats of retaliation against Trump's ban on giant Chinese telecoms company ZTE have sunk in.

As a reminder, in response to Trump's 7-year ban of component sales by US companies to China's ZTE (in retaliation for "tech IT theft and distribution"), a tide of angry populist rhetoric swept across China's social media and press, amid warnings from Chinese officials (and the company itself) that

"The Denial Order will not only severely impact the survival and development of ZTE, but will also cause damages to all partners of ZTE including a large number of U.S. companies."

China's foreign ministry spokeswoman Hua Chunying lashed out at the US, saying that "the U.S. is thinking and acting like a bully - only it can have high tech and others cannot. With regard to the high tech restrictions, they are citing the reason of national security, but their motivation is protectionism. Is the U.S. really that fragile?"

Additionally, at the time we pointed out that ironically, the US could be hurting its own interests through the export ban: as the WSJ reports, according to  international trade experts, the sales the will affect not just exported items, but also software and components marketed by American companies but manufactured in other parts of the world.

That would include a broad slate of hardware critical to ZTE, including Qualcomm semiconductors. It also potentially covers software like the Android operating system, which powers ZTE smartphones. ZTE is working to find ways to preserve its access to Android, according to a person familiar with the matter.

“If they’re unable to use Google Android, I think that’s a big blow because there’s no real viable alternative at this point,” said Neil Shah, an analyst with research firm Counterpoint.

And those "unintended consequences" have already started. China has made the semiconductor industry a key priority as part of its "Made in China 2025" initiative aimed at reducing dependence on foreign technology imports. The plan calls for at least 40% of all Chinese smartphones to contain domestically manufactured chips - which the government is plowing billions of dollars into. 

Analysts say money is now “raining down” from Beijing and state-backed funds to support the chip market, while the country’s state chip fund, known as the “Big Fund”, raised an estimated $32 billion in a new round of financing last month.  -Reuters

China won’t allow the U.S. to use chips as a stick against it. China can take steps to replace foreign-made chips with domestic,” reports China's hawkish Global Times newspaper in a commentary this week. “The Trump administration is helping us Chinese make such a decision.”

All of which perhaps explains why President Trump appears to have backed down from his most vociferous threats this morning, tweeting that he and President Xi "are working together to give massive Chinese phone company, ZTE, a way to get back into business, fast." Trump went on to explain that "too many jobs in China [had been] lost," perhaps noting subliminally that the same may apply to American workers, as Trump then concluded that the " Commerce Department has been instructed to get it done!"

Whether this is some quid pro quo to Xi for his help with Kim is unclear but it sure makes things awkward for some US allies who have voiced extremely strong negative opinions about ZTE in the vassal manners...

Last month UK warned business not to use ZTE equipment or services as it would have a “long term negative effect on the security of the UK," and UK's Cyber security chief warned "the use of ZTE equipment or services would present risk to UK national security that could not be mitigated effectively or practicably."

So does that mean that Washington is now supporting the rescue of a company that represents a threat to UK security?

For now the response is positive - as the editor of the Global Times, unofficial PRC mouthpiece, called it a good decision...

Comments

Hugh_Jorgan BaBaBouy Sun, 05/13/2018 - 11:43 Permalink

He has already gotten something for it. Watch over the next few weeks there will likely be a small surprise concession by China that pops up in the news.

If Trump tweets it, he "owns it" and feels like he got a good deal.

In reply to by BaBaBouy

MK ULTRA Alpha Buckaroo Banzai Sun, 05/13/2018 - 18:57 Permalink

It could be, US firms are taking hits from the Chinese and have asked Trump for relief from Chinese pressure. China retaliation, Trump kowtows for US multinationals.

We must extricate this nation from the grip of the Chinese, the UK and the Zionist Israel First or we'll not have a country.

What happened to the infrastructure build? it was a $1 trillion, well planned jobs plan which would have increased productivity with new infrastructure. A ten year infrastructure plan which everyone said was needed, and way over due. Congress didn't want to even consider it.

The entire nation needs new infrastructure, roads, airports, oil and water pipelines, electrical transmission corridors, harbors and reservoirs. China can build world class infrastructure with our money and this makes China more productive.

We're losing because this nation is torn in all directions. US multinationals are still directing the one world trade plan, example, Ford is not going to make cars in the US, they'll build the cars in China and import them to the US. Corporate America is not on board for America First.

In reply to by Buckaroo Banzai

Hugh_Jorgan Fireman Mon, 05/14/2018 - 11:49 Permalink

I'm not a MAGA chanting monk, by any stretch. I'm just seeing a pattern emerge in the past year and that was the thrust of my comments.

I do agree that Trump will likely be the fall-guy for the coming conflict that will erupt out of the end of The Iran "Deal" (sic). The underlying push will be about creating a massive smokescreen "we've always been at war with East Asia", etc. and making BIG moves toward the central, global, socialist, governance than about any particular regional conflict.

In reply to by Fireman

Endgame Napoleon Hugh_Jorgan Sun, 05/13/2018 - 12:37 Permalink

The US moved production in the PC & mobile-tech industries that American citizens pioneered to China, offshoring over 2 million jobs and sacrificing all of those SS contributions before the Boomer retirement so that the Chinese could have those jobs, in addition to giving them the opportunity to pinch technology secrets.

Yet, China claims that the US is a bully, saying the US thinks that only Americans can be in tech. 

They have nothing if not nerve.

But Trump should stay on controlling the US border and mass-scale immigration, not because the Chinese have lost jobs.

America has 50 to 95 million citizens out of the workforce, depending on how working-age is defined, along with millions of underemployed citizens, many of whom get their major household bills—like rent and groceries—paid by taxpayers by having sex, reproducing in single-earner households and staying below the income limits for welfare by working only part time. 

They still get their up to $6,431 in refundable child tax credit EITC money when they just work part time and are counted as “employed,” even though government pays their bills. They get that unearned income from government, even when they are not citizens of this country and/or are in this country illegally, while millions of out-of-the-workforce citizens are not even counted as unemployed and qualify for zero in public momey.

If American businesspeople ever stop the corporate buyback spree, using their giant tax cuts to create jobs in this country that cover rent that absorbs more than half of earned-only income for millions of non-welfare-eligible citizens, those jobs will go to illegal aliens on welfare if the flow of illegal border crossing is not stopped. 

In reply to by Hugh_Jorgan

RedBaron616 BaBaBouy Sun, 05/13/2018 - 12:43 Permalink

Coward. I knew he wouldn't do anything to China. We will continue to lose ground. MAGA was just a bone thrown to reel the voters in. Voters are stupid and have short memories. Poke this country; it's done.

In reply to by BaBaBouy

rejected RedBaron616 Sun, 05/13/2018 - 15:30 Permalink

"Coward. I knew he wouldn't do anything to China."

Too late. 15-20 years ago, especially before NAFTA,,, yes it could have been done.

Today the corporations are hooked on the low wage drug and will not return to the USA willingly. In fact attempting to force them could put many OOB. You must make it beneficial for them.

The only way is for governments (national, state, and local) to give USA made products priority on bidding. Yes it will cost more but considering the trillions we have poured and are pouring into military ventures where would you prefer this borrowed money to go? 

I would also suggest the millions that Americans spend on foreign goods stop and spend that on USA goods. That is getting difficult as less and less at Walmart and others are USA made. In that case,,, if it's not desperately needed, don't buy it at all.  Americans could force Apple to return simply by refusing to buy their products unless they are made in the US.

"We will continue to lose ground. MAGA was just a bone thrown to reel the voters in."

Correct.

 

 

In reply to by RedBaron616

jin187 rejected Sun, 05/13/2018 - 16:44 Permalink

The mob simply won't acknowledge that high paying jobs require demand for high priced goods.  They expect the US to just magically be a manufacturing powerhouse while they buy cheap Chinese everything.  We simply can't compete with the Chinese because their entire economic model is about abusing workers, breaking rules, and destroying the environment, in order to undercut us.

The only way this gets better is when we accept $2000 iPhones, and tell China to go fuck themselves.  The problem is that during the process, jobs and business will be lost on both sides, until people invest in the new locally sourced economic model.  If we could just stick it out for 5-10 years, we'll have our mines and factories back to full-scale operation, and our low-ceiling citizens back to making a decent living.  Trump's enemies, and ignorant people that demand instant solutions will strike hard during such a period, and make it politically impossible to pull off, which is pretty much what has happened every time someone tries to walk back NAFTA and other 3rd world outsourcing for the last 30 years.  We caused this cancer, and have to take our medicine, otherwise this doesn't end until China becomes the world's biggest power, and we are left too bankrupt to even buy their goods.

In reply to by rejected

DemandSider jin187 Sun, 05/13/2018 - 19:06 Permalink

"We simply can't compete with the Chinese because their entire economic model is about abusing workers, breaking rules, and destroying the environment, in order to undercut us."

 

Many countries in the third world have those corporate amenities. What The PRC did was offer non profit means of production to international corporations, and they gleefully bought plenty of rope to hang themselves with.

In reply to by jin187

Count Cherep BaBaBouy Sun, 05/13/2018 - 16:49 Permalink

"Ready! — Fire! — Aim! —"

"Ouch, ouch, my foot, my foot! ..."

In anticipation of the inevitable, I offer this food for thought:

toady

n. pl. toad·ies

A person who flatters or defers to others for self-serving reasons; a sycophant.

tr. & intr.v. toad·ied, toad·y·ing, toad·ies

To be a toady to or behave like a toady. See Synonyms at fawn1.

[From toad.]

Word History: The first toadies were actually toad-eaters. The word toady has its origins in the practices of seventeenth-century quacks and charlatans who claimed that they could draw out poisons from poisoning victims. Toads were thought to be poisonous, and so these quacks would have an attendant eat—or pretend to eat—a toad. The quacks could then make a show of drawing out the poison and saving their helpers' lives. Since eating a toad is an unpleasant job, these attendants came to epitomize the type of person who would do anything for a superior, and toadeater became the name for a flattering, fawning parasite. In the eighteenth century, the noun toadeating meaning "sycophancy, flattery," appeared, and there was even a verb to toadeat, meaning "to flatter, fawn upon." For example, the correspondence of Caroline Fox, Lady Holland (1723-1774), contains the following comment in a letter to her sister, the Duchess of Leinster: She [a family member] has told Lord Holland all the privileges the old Duchess expects. He says you have them all already, you are so toad-eated. Later, in the nineteenth century, the word toady, "sycophant, flatterer," came into use, and it was apparently formed directly from the word toad rather than shortened from toadeater.

https://www.thefreedictionary.com/toady

In reply to by BaBaBouy

JLarryL boostedhorse Sun, 05/13/2018 - 12:06 Permalink

The problem is that technology gets widely disseminated and easily copied. People are going to copy and refine, that's really what so much of technology is about -- see Steve Jobs. Innovative technology itself isn't enough.

Trump can try, but high tech can't be contained. It backfires if you try. Immediately China has all the motivation it needs to build its own semiconductor industry. The Communist leadership harnesses a new fervor in its people. It is Pyrrhus of Epirus for the 21st century.

I like to think that we in the USA would be much better off if we focused our innovation and investment LESS on the military. But I dream.

If we are victorious in one more battle with the Romans, we shall be utterly ruined. — Plutarch

In reply to by boostedhorse

Endgame Napoleon JLarryL Sun, 05/13/2018 - 12:47 Permalink

You are right about the allocation of government funds, but most Americans see zero economic benefits from the innovation. The industrial jobs are distributed to the low-cost labor in foreign countries. And the gains from the innovation all go to the top 1% business class and the top 20% of assortative mates who concentrate the good-paying jobs in fewer households, investing their extra money from mostly salaried, non-job-creating wealth in companies employing mostly low-cost laborers overseas and welfare-boosted / womb-productive citizens & noncitizens here who do not need decent wages or full-time hours due to their ever-growing, pay-per-birth potpourri from government. 

In reply to by JLarryL

DemandSider JLarryL Sun, 05/13/2018 - 16:45 Permalink

"Trump can try, but high tech can't be contained."

 

Which is why trying to base on economy on intellectual property in the internet age is stupid. The PRC has shown that the protection of production, at all costs, is paramount to internal improvements in infrastructure and the expansion of a middle class. Neoliberalism has been a colossal failure for The West, and manufacturing trade surplus countries like The PRC want nothing to do with it. These smart, mercantalist countries understand that war spending damages their competitiveness, while the neoliberalized ones need war as part of their banksters' currency protection rackets.

In reply to by JLarryL

artichoke JLarryL Sun, 05/13/2018 - 19:34 Permalink

They are unable to make a native semiconductor industry, otherwise they would have already done it.  This is why the Chinese get so angry, really bitterly angry, when we suggest more of an arms-length relationship.  Because they'll fail.  Their tech. miracle was copying us, but their populace seems incapable of doing it themselves even now.

It means we found their soft spot.

In reply to by JLarryL

caconhma JLarryL Sun, 05/13/2018 - 20:47 Permalink

Just let me explain to imbeciles that just pouring money in science and engineering is not a guarantee that something will work.

Between the WW1 and WW2, German scientists received almost 70% of all Nobel Prizes in science with very little if any fundings.

NAZI scientists with extremely limited funding during the WWII were able to create rocket technology, guided missiles, jet engines airplanes, enrich U-238 to weapon-grade U-235 that was used by Americans to built first US nukes dropped on Japan, etc.,

To advance state-of-art science & engineering, it is absolutely necessary to build the educational, training, and RD&D foundation and infrastructure that require at least 2-3 generations of the scientists/engineers. Up to the late 1980s, most of leading US technology programs were supervised/led by NAZI scientists.  After Dr. Wernher von Braun has retired, the US space programs went nowhere.

Remember that China is still a 3rd world country. Using lots of money, China can steal lots of technologies but it has very limited capabilities to develop their own.

 

In reply to by JLarryL

Fireman Cardinal Fang Sun, 05/13/2018 - 12:32 Permalink

So true...so true...Look at "our" fucking cutting edge spontaneous combusting "Teslas". If it weren't for the fact that the damn chink invented wheels (or oh vey...worse...the Iranians!!!!!) were on there....None of Mad Mars Musk shit would be blowing up round da clock!

Oh and DO try to catch up with the current state of affairs with leaders in quantum tech. You appear to be woefully fucking parochial.

 

http://www.newsweek.com/china-using-quantum-physics-take-over-world-695…

https://www.forbes.com/sites/saadiampekkanen/2016/09/30/china-leads-the…

http://qa.answers.com/Q/Did_the_chinese_invent_the_wheel

In reply to by Cardinal Fang

wafm iClaudius Sun, 05/13/2018 - 12:35 Permalink

Trump doesn't get advice, he gets orders from the deep state. the guys in suits that walk in straight after he's sworn in, and tell him how things will go from then on. Trump is just another fuckin puppet on aleash, and if he doesn't toe the line he knows what will happen to him and to the rest of his clan.

In reply to by iClaudius

tmosley Sun, 05/13/2018 - 11:39 Permalink

Stop characterizing everything in terms of "backing down". Everything Trump does is in pursuit of getting a better deal. Trump has extracted some concession from the Chinese over this.

The days of US bullying everyone they can bully, and being the enemy of everyone else are OVER. Now we will deal with EVERYONE.