After Helping ZTE, China Warns Firms Not to Be ‘Giant Babies’

The logo of ZTE Corp is seen on its building in Beijing China

Under the new deal announced on Thursday, the company will pay a $1 billion fine, place another $400 million in escrow, and also make management changes.

If you'll recall, last month ZTE was handed an export ban as the result of not following the terms of a court case years ago. The U.S.is maintaining its 10-year export ban on ZTE, but the ban is indefinitely suspended and is likely to remain suspended if ZTE complies with the U.S. trade laws.

The deal includes a $1 billion penalty against ZTE, and a compliance team, chosen by the United States, will be embedded at the company, Commerce Secretary Wilbur Ross told CNBC Thursday morning. The U.S. also needs China's help negotiating the denuclearization of North Korea ahead of a June 12 summit between President Donald Trump and North Korea's Kim Jong Un.

"We will closely monitor ZTE's behavior", Commerce Secretary Wilbur Ross said in a statement. In addition, the company will put $400 million into an escrow account, which the USA can access if it finds ZTE to be out of compliance with the agreement.

ZTE could not be reached for comment by either Reuters or the Post.

The US blocked ZTE's access to US suppliers in April, saying the company violated a 2017 sanctions settlement related to trading with Iran and North Korea and then lied about the violations.

It's been a really rough couple of months for ZTE, but according to new reports, the company's troubles may soon be over as it has apparently almost reached a deal with the United States government.

Ross said the U.S. will install its "own compliance people" to monitor the company, and shareholders will bring in new management and board.

The ban, which traces back to a breach of the USA embargo on trade with Iran, had prevented China's second largest telecoms equipment maker by revenue from buying the US components it relies on to make phones and other devices.

One of the USA companies caught in the crossfire is Qualcomm Inc QCOM.O , whose products account for the lion's share of chips inside ZTE smartphones.

Chinese anti-monopoly regulators have withheld approval of Qualcomm Inc.'s proposed acquisition of NXP Semiconductors, which some commentators say is being used as leverage against Washington. That left a USA deficit of more than $375 billion. Their jobs were in jeopardy after ZTE lost access to USA technology and suspended most of its operations.

"We executed a definitive agreement with ZTE", Ross told CNBC Thursday. "I hope that we can devote ourselves to hard work and innovation and get the company back into business as soon as possible".

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