ZTE’s Dream Of Getting Back To Business Hit A Rock Bottom Again
Trade Tensions Between US and China Rise
The domestic pressure in the US is heated, political temperatures are high! This has seen things work out differently as opposed to earlier developments where trade tension seemed to be easing between China and the US. In Mid May China had agreed to boost imports of grain, oil and gas and the US was to reciprocate by putting on hold tariffs imposed on China. The US Commerce Department had told the lawmakers that it was ending an earlier push to ban the Chinese phone giant, ZTE.
Willy Shih, an economist at Harvard Business School, said China steals intellectual property and puts pressure on US, Germany and other large foreign companies to acquire proprietary know-how in exchange for market access as it has a large population. He further goes on to explain that the Western companies are facing a challenge where their crucial intellectual property is commoditized despite “taking years or even a generation to develop”. Chinese companies buy tools from such Western developers only to sell them because “only then can they justify the substantial investments and risks associated with pushing the boundaries of new technology.” He hints “it’s much harder for US companies to keep the technical lead.”
President Trump had earlier this month decided to retreat from threats to impose on billions of dollars worth of Chinese goods. Republicans had strongly condemned the President’s softening of penalties on ZTE, considering that it had traded with Iran and North Korea against the US sanctions. The company had to shut down much of its operations.
Reuters reported on 29th May that the sitting POTUS will move ahead on tariffs against $50 billion in goods from China despite his recent efforts to cool trade tensions between the two Superpowers. The White House had earlier in the week listed Chinese products to face tariffs to be released by June 15th. China’s Commerce Ministry see this as a move by the US to add more bargaining power ahead of Commerce Secretary, Wilbur Ross, visit to China for talks in early June. The officials in China have warned the US to stay in line with their previous pledge to hold off on tariffs while the talks keep going.
The sudden turn of events has seen trading partners criticize Trump’s move as an act that erodes American Credibility. Members of Congress too are of the general feeling that the President might be getting into a costly trade war. China has cautioned of equal retaliation on importing US Aircraft and soya beans.
As at now, the future of ZTE is so uncertain as it very much depends on the trade relations between its domestic government and the US. We are hopeful that more details and positivity will start to show after Wilbur Ross visit to China early next month. My urge to you my sophisticated readers, keep checking.