Donald Trump's ZTE deal poised for Senate rollback

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Politico noted that the amendment spreads a wide net, with the outlet saying the language used "prohibits the federal government from doing business with ZTE or Huawei or other Chinese telecom companies".

The sanctions banned ZTE from trading with United States companies - blocking them from buying the microchips they needed, and effectively shuttering the company.

ZTE Corp's (000063.SZ) settlement with the U.S. Commerce Department that would allow China's No. 2 telecommunications equipment maker to resume business with U.S. suppliers was made public on Monday, days after the company agreed to pay a $1 billion fine, overhaul its leadership and meet other conditions.

The bipartisan amendment would reimpose penalties on ZTE for violating USA sanctions against exporting to Iran and North Korea that the Trump administration sought to lift in exchange for the company paying a $1 billion fine and funding an in-house compliance team of US officials.

Senators in support of the original deal also think that it is unrealistic for USA officials to police ZTE's future actions, as the Chinese company could still conduct improper business even under a watchful eye. The idea of ZTE being used as a bargaining chip in trade negotiations with China angered lawmakers, who view the company as a national security issue. It will also have to replace its management board.

ZTE has more than a dozen senior vice presidents, which is a level below executive vice president, said the company source who declined to be identified as they were not authorized to speak to the media.

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The deal will involve ZTE paying a $1bn penalty and hiring a US-approved compliance team.

ZTE shares plunged in Hong Kong and Shenzhen on Wednesday following the settlement, with investors wiping about $3 billion off its market value.

During its trading halt, fund managers cut their valuations of ZTE shares, with some lowering valuations of its A-shares to 20.04 yuan per share, or a 36 per cent discount to the closing level on April 16.

There is also a risk that the Trump administration's move to lift the ban on ZTE could be undercut by Congress. After all, a Congressional report from 2012 called ZTE and Huawei threats to US national security.

However, this year the Commerce Department reimposed the sanctions when it emerged that the telecoms company - China's second-largest - had not, in fact, disciplined the management.

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