Trump’s comments on China’s ZTE draw security concerns

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WASHINGTON (Reuters) – President Donald Trump’s pledge to help China’s ZTE Corp “get back into business, fast” and save Chinese jobs after a U.S. ban crippled the technology company drew condemnation from some lawmakers on Monday over trade and security concerns.

FILE PHOTO: The logo of ZTE Corp is seen on its building in Beijing, China April 19, 2018. REUTERS/Stringer

“I hope this isn’t the beginning of backing down to China,” Republican U.S. Senator Marco Rubio said on Twitter, saying Chinese competition had “ruined” many U.S. companies.

“(The) problem with ZTE isn’t jobs & trade, it’s national security & espionage. Any telecomm firm in #China can be forced to act as tool of Chinese espionage without any court order or any other review process,” Rubio, a former Trump rival, said. “We are crazy to allow them to operate in U.S. without tighter restrictions.”

Trump’s reversal on Sunday came as high-level trade talks were to resume this week between the world’s two largest economies. Washington’s tough stance on Chinese trade practices have put the countries on course for a possible trade war.

“Too many jobs in China lost. Commerce Department has been instructed to get it done!” Trump wrote on Twitter, saying he and Chinese President Xi Jinping were working together on a solution for ZTE (000063.SZ) (0763.HK), China’s second-largest maker of telecommunications equipment.

The White House said later that U.S. officials were in contact with Beijing about ZTE and that Trump expected Commerce Secretary Wilbur Ross to make an independent decision.

FILE PHOTO: U.S. President Donald Trump speaks about lowering drug prices from the Rose Garden at the White House in Washington, U.S., May 11, 2018. REUTERS/Leah Millis

In April, the Commerce Department banned U.S. companies from selling to ZTE for seven years after it illegally shipped U.S. goods to Iran and North Korea.

ZTE, whose shares remain suspended, has not commented on Trump’s statement.

Sources briefed on the matter said Beijing had demanded the ZTE issue be resolved as a prerequisite for broader trade negotiations.

Chinese Foreign Ministry spokesman Lu Kang on Monday said China “greatly appreciates the positive U.S. position on the ZTE issue” and that Chinese Vice Premier Liu would visit Washington from Tuesday to Saturday.

U.S. concessions over ZTE could also smooth the way for U.S. chipmaker Qualcomm Inc’s (QCOM.O) $44 billion takeover of NXP Semiconductors (NXPI.O), which has been delayed by a lengthy antitrust review by China’s Ministry of Commerce.

Top Senate Democrat Chuck Schumer said on Monday that Trump was trading a crackdown on intellectual property theft for selling goods in the short run.

“One of the few areas where the president and I agreed, and I was vocally supportive, was his approach towards China. But even here he is backing off, and his policy is now designed to achieve one goal: make China great again,” he said in a statement.

Democratic U.S. Senator Ron Wyden echoed Schumer’s comments.

“Unilateral concessions before an upcoming trade negotiation. This may be the art of the deal for China but it’s a big loser for American workers, companies, and national security,” he said.

Reporting by Valerie Volcovici and Karen Freifield, Steve Holland, David Lawder, Chris Sanders and David Morgan in Washngton; Michael Martina, Sue-Lin Wong and Matthew Miller in Beijing; and John Ruwitch in Shanghai; Editing by Peter Cooney, Philip McClellan and Martin Howell

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