China denies setting target to cut USA trade surplus

Friday, 25 May, 2018

President Donald Trump's administration is working on details of a deal with the Chinese, and may lift a ban on USA companies selling hardware and software to Chinese corporate ZTE if it works out, the Wall Street Journal reported late on Monday.

However, President Trump says ZTE may get a hefty fine that is over $1 billion and will be required to form a new board of executives and make significant changes in its leadership.

"The president asked me to look into that", Trump told reporters at the White House on Tuesday.

Not everybody is happy about the outcome, and Republican Senator Marco Rubio is one of the most vocal critics of Trump's decision to save ZTE.

Trump has also found himself under attack for retreating from penalties his administration announced against a large Chinese telecommunications company, ZTE, for violating United States sanctions against Iran and North Korea. "And I also envision that they will have to buy a big percentage of their parts and equipment from American companies", he said.

One sanctions expert questioned whether Trump has the legal authority to impose new fines on ZTE, which agreed a year ago to pay $1.19 billion, including $890 million in fines and penalties, and an additional penalty of $300 million that could still be imposed. More important, it confronts structural issues relating to its growing massive fiscal deficit, declining exports, dependence on U.S. exports, its mountain of debt, the distrust it has generated in foreign enterprises.

The reprieve for ZTE, hit by a seven-year ban in April that had crippled its operations, could include China removing tariffs on imported USA agricultural products, as well as buying more American farm goods, two people briefed on the matter told Reuters. "We will begin working on veto-proof congressional action", Rubio said on Twitter.

The ban has threatened the viability of ZTE by cutting off access to companies that supply 25 percent to 30 percent of its components. "We're discussing various deals".

Trump's statement comes amid the negotiations between the world's two largest economies after potential tariffs on both sides raised fears of a trade war, even as some tensions have eased over signs of some possible progress.

Senate Minority Leader Chuck Schumer, Democrat of NY, said the proposed arrangement would "do nothing to protect American national or economic security and are simply a diversion from the fact that we have lost".

President Donald Trump has often bragged of his friendship with his Chinese counterpart Xi Jinping, but recent events point to growing stresses between Washington and Beijing. Despite reporting in The Wall Street Journal stating that Trump had reached a deal with China to revive ZTE, the president is now pushing back on those claims, saying that his administration has yet to come to an agreement.

Some also alleged suspicious timing, pointing to a deal struck between a Chinese-owned company and one of the Trump Organization's business partners in Indonesia.

Congress is also considering other measures to block changes.

In a separate statement released by the White House, Trump said he had "instructed" Ross to "consider" kicking off the probe.

Treasury Secretary Steven Mnuchin said on Sunday the administration agreed to put proposed tariffs on hold while it builds on a "framework" for negotiations with China on trade issues, following two days of high level negotiations in Washington. He said the punishment was never meant to put the company out of business. Kudlow said these practices must be stopped and that China was to blame for the actions Trump has been driven to take with regard to China.

Don Fox, the former general counsel of the U.S. Office of Government Ethics (OGE), argued in an interview with the Associated Press on Wednesday that the Chinese government "knew exactly what they were investing in" when it injected $500 million into the Indonesia project, which is called Lido City.

"China has made a fortune", he said of the Asian powerhouse's trade relationship with the United States.