Senior ZTE Execs Sidelined Over US Trade Sanction Violations

Chinese company ZTE sidelined two senior executives over its violations of U.S. trade sanctions imposed on Iran and North Korea, i.e. its efforts to have the issue resolved until it goes bankrupt, South China Morning Post reports, citing sources familiar with the development. ZTE Chief Technology Officer and Executive Vice President Xu Huijun is no longer performing his usual duties and neither is Huang Dabin, the head of the firm's overseas corporate operations. It's presently unclear whether the suspension is meant to be temporary in nature or indicative of a more permanent move. In case of a latter scenario, the sidelined executives may not necessarily be laid off as some of their colleagues who previously found themselves in a similar situation were reassigned.

ZTE already replaced its Chief Compliance Officer and legal counsel Cheng Gang in March, shortly before the Department of Justice issued a denial order preventing the firm from purchasing and licensing American technologies over the next seven years. The ban crippled ZTE's business and is threatening to bankrupt it in the near future, with the company being heavily reliant on Qualcomm's chips and Google's Android operating system, both of which are central pieces of its mobile strategy. ZTE's operations remain inactive until the situation is resolved, having been shut down earlier this month.

As part of wider trade negotiations with China, U.S. President Trump already reached a preliminary agreement that would replace the denial order with a $1.3 billion fine and a broad range of concessions, having confirmed as much several days back. The episode still appears to be far from resolved as the President's effort is facing bipartisan opposition from Congress and may end up being blocked by a supermajority vote meant to reverse the original reversal. ZTE previously argued the denial order is too harsh of a reaction to what was self-reported as an accidental omission and not a premeditated act of defiance against Washington. China's President Xi Jinping is understood to have personally urged President Trump to attempt alleviating the issue and repairing the relationship earlier this month. The Commerce Department previously also accused ZTE of lying to its investigators on several occasions, having cited that as another reason for the purchase ban to be issued.

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