The US has officially signed an agreement with Chinese telecom-equipment maker ZTE that will allow the company to buy essential components, a breakthrough that was seen as key to resolving the ensuing trade conflict between the world’s two largest economies.
Shares of ZTE rose 25% in Hong Kong on the news. A potential ban on US exports to the firm would have crippled the firm, analysts said.
— U.S. Commerce Dept. (@CommerceGov) July 11, 2018
The Trump administration’s decision to grant a reprieve, which was previously made public, had been seen as a concession in the ongoing trade war. While the world’s two largest economies failed to reach a deal to avert a tariff battle, the move leaves the door open to a continuation of talks.
Following the decision by the US to impose tariffs on US$34 billion in Chinese goods, it was reported that US President Donald Trump was disappointed in Beijing’s response to his lenience on ZTE. The move came at a political cost, with hardliners within his own party, along with supportive pundits in the media, levying harsh criticism in response.
Trump, according to multiple news outlets, felt that China’s proposal to buy more energy and agricultural goods from the US didn’t go far enough.