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Trade war

US lifts ZTE ban after $1.4bn payment

Chinese smartphone maker now free to purchase American components

U.S. Commerce Secretary Wilbur Ross at a state dinner in Beijing in November 2017. Ross said his department will closely monitor ZTE's actions going forward.   © Reuters

NEW YORK -- The U.S. Commerce Department lifted a parts ban on Chinese smartphone maker ZTE on Friday, opening up a path for the beleaguered company to restart its stalled business operations.

The company's name was removed from the "denied persons list" shortly after turning over $400 million in escrow in addition to a $1 billion penalty it paid to the U.S. Treasury last month.

ZTE's payment to the U.S. is part of a settlement reached by the two last month to remove the ban on purchasing American components that had crippled the company's ability to operate. The company was also forced to replace its entire board of directors and has installed a team of compliance coordinators assigned by the Commerce Department's Bureau of Industry and Security.

"While we lifted the ban on ZTE, the department will remain vigilant as we closely monitor ZTE's actions to ensure compliance with all U.S. laws and regulations," Commerce Secretary Wilbur Ross said in a statement from his office announcing the ban's lifting on Friday.

Republican Senator Marco Rubio criticized the decision. "ZTE should be put out of business. There is no ‘deal’ with a state-directed company that the Chinese government and Communist Party uses to spy and steal from us where Americans come out winning," he said in a statement.

The seven-year parts ban was first installed in April of this year after ZTE misled the U.S. government about its implementation of a March 2017 settlement reached after the company was found violating U.S. sanctions against Iran and North Korea.

Meanwhile on Friday, ZTE said it expected to record a net loss in the first half of the year due to the heavy fines.

It estimated a preliminary net loss of 7.0-9.0 billion yuan ($1.05-1.34 billion) in January to June period versus a profit of 2.3 billion yuan the previous year, it said in a filing to the Hong Kong Stock Exchange.

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