ZTE Corp, China's biggest listed telecom gear maker, said at a press conference on Friday in its Shenzhen headquarters that it's going to ramp up investment in R&D in a bid to become self-reliant and that it is against a “country using unilateralism to sabotage global industry supply”, after the U.S. government imposed a full-scale export ban on it this week.
Yin Yimin, ZTE's board chairman since last March when the state-owned company agreed to pay a fine of US$1.2 billion to the U.S. government for violating its trade sanctions on Iran and North Korea, addressed the US ban that is believed by analysts to be able to put it out of business. Yin told the media the U.S. Commerce Department had issued the Denial Order to hand ZTE the most severe punishment, citing reasons such as the company’s failed to cut bonuses of employees involved in acts violating the U.S. export control and submitted false statements two times.
“Sanctions like these would immediately put the company in a state of a shock,” Yin said, noting the company's 80,000 staff, hundreds of operator clients worldwide, tens of millions of American consumers, and 300,000 shareholders would be affected.
The ZTE ban comes at a time when China and the U.S., the world's two biggest economies are locked in tit-for-tat trade conflict, in which the two parties have exchanged threats to impose additional tariffs on tens of billions worth of imports from each other.
The ZTE ban is widely interpreted by international media as a tool used by the U.S. to exert pressure on the Chinese government to overhaul its trade practices and industrial policies. So, industry insiders and observers have suggested that only dialogue between the two governments could help lift the ban now.
But Will Reinert, the press officer of the U.S. Commerce Department, indicated there is no room for negotiation and turning the ban around now, in a phone interview with thepaper.cn, a Shanghai-based news portal. Reinert emphasized that it's a ban for seven years, so strictly, negotiations could only be expected to be resumed seven years later.
Intel Corp, the world's second-largest semiconductor chip maker by revenue, has announced to implement the ZTE ban imposed by the U.S. government. Meanwhile, ZTE is also believed to be banned from using Android OS, Google's operating system for mobile devices. Reinert confirmed this is the case, saying, “they (Google LLC) are subject to our export administration law, there must be no violation to this.”
Echoing the U.S. move, UK's cybersecurity watchdog has also reportedly blacklisted China's ZTE Corp. The National Cyber Security Center (NCSC) warned telecoms operators in the UK that use of ZTE's equipment and services could pose a national security risk. That, reported by Financial Times, “effectively shuts it out of billions of pounds in contracts to upgrade the UK’s telecoms infrastructure to 5G and full fibre networks.”
China's burgeoning hi-tech sector, also regarded as its soft underbelly, has been targeted by the Trump administration in the recent trade disputes, admittedly the most intense in history that may escalate into a full-blown trade war.
According to a Reuters report, “the U.S. Treasury is considering ways to restrict sensitive Chinese investments in the United States by invoking an emergency powers law and bringing forward some security review reforms for corporate acquisitions.”
The U.S.-China Economic and Security Review Commission under the U.S. Congress released a report this week, claiming that it's possible that Chinese government had supported certain businesses to commit business espionage activities to boost competitiveness of Chinese companies, with ZTE, Huawei and Lenovo being named. In response, Hua Chunying, the spokeswoman of China's Ministry of Foreign Affairs, said that if all the U.S. policies are based on “possibilities”, it will be “irresponsible and dangerous”.
According to Hua, the U.S. government has been 'active' recently in curbing China-US trade and investment in hi-tech sectors, which is indicative of the U.S. hegemonic mentality to only allow itself instead of China to own advanced technologies.
“If you live in China, you will see products like iPhones everywhere, I don't regard it as a threat, but in the US, if people purchase Huawei cell phones, they are perceived to be posing threats to national security,” she said, asking, “Being the world's No. 1 technologically advanced country, is it true that it has become so fragile?”
Hua emphasized the China-US relationship is now at the crossroads, urging “some people in the US to update their ideas and perceptions about international relations, going with the tide of times instead of going against it.”