Photo: AFP/Johannes Eisele
China's ZTE corporation. Photo: AFP/Johannes Eisele

The Trump administration has told US lawmakers that it has reached a deal with Chinese telecoms giant ZTE that would see a ban on US sales to the firm lifted, according to reports from Reuters and The New York Times.

Sources familiar with the communications with Congress said the deal would require ZTE to pay a hefty fine, place American compliance officers at the firm and make changes to its management. Scaling back the ban on sales to ZTE, a move which threatened to cripple the Chinese firm, was reportedly a precondition set by Beijing for trade negotiations to move forward.

The agreement on ZTE comes a week before US Commerce Secretary Wilbur Ross is scheduled to travel to Beijing to continue trade talks, which appeared to show progress after a Chinese delegation visited Washington last week. Trump tempered optimism early this week by suggesting in a tweet that a final deal may still prove elusive.

“Our Trade Deal with China is moving along nicely, but in the end we will probably have to use a different structure in that this will be too hard to get done and to verify results after completion,” the president said in a tweet on Wednesday.

Trump has come under fire amid reports that his administration was preparing to grant leniency to ZTE, including from Republican Senator Marco Rubio who has been one of the most outspoken critics of scaling back any penalties.

“Sadly #China is out-negotiating the administration & winning the trade talks right now. They have avoided tariffs & got a #ZTE deal without giving up anything meaningful in return by using N.Korea talks & agriculture issues as leverage. This is #NotWinning,” Rubio wrote in a tweet.

Democratic Senate Minority Leader Chuck Schumer joined Rubio in calls for taking a hard line against the Chinese tech giant, urging Congress to take action following the latest report.

“Simply a fine and changing board members would not protect America’s economic or national security, and would be a huge victory for President Xi, and a dramatic retreat by President Trump. Both parties in Congress should come together to stop this deal in its tracks,” Schumer said in a statement, as quoted by The Hill.