This Article is From May 16, 2018

Trump ZTE Tweet Points to Pyongyang, Singapore, Oslo

Tim Culpan
Business
May 16, 2018 00:38 am IST
- Published On May 16, 2018 00:34 am IST
- Last Updated On May 16, 2018 00:38 am IST

Read Time: 3 mins

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(Bloomberg) -- President Donald Trump's sudden concern over Chinese jobs may indicate a realization that neither a failed nor a nationalized 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 U.S. embargo on Iran by using American chips in equipment it sold to the Middle Eastern country.

The Commerce Department found out.

ZTE agreed to pay a fine and punish employees in return for the U.S. 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 U.S. chips for seven years. Unable to make its equipment without American technology, ZTE halted operations last week.

Donald Trump found out.

For reasons that are the subject of speculation by political analysts and the Twitterati, 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 U.S. national interests.

Alternatively, ZTE could be de-facto nationalized via a Team China strategy, an idea I floated last week. This would be an even bigger challenge to U.S. interests, because such an entity would be as formidable as Huawei Technologies Co.

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

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

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 U.S. would be a good thing, and a denuclearized North Korea is a necessary part of that. There's even talk of a Nobel Peace Prize for 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 — Kim will need reassurance from Beijing that both his person and his country will be safe. Trump knows this. Xi knows that Trump knows this.

But 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.

To contact the author of this story: Tim Culpan at tculpan1@bloomberg.net.

To contact the editor responsible for this story: Katrina Nicholas at knicholas2@bloomberg.net.

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