Powered by MOMENTUM MEDIA
subscribe to our newsletter sign up

Trump and ZTE: ‘something to watch pretty carefully’

President Donald Trump

President Trump’s acrobatics in regard to Chinese telecommunications company ZTE have left some policy-makers with whiplash, while investors are being urged to remain vigilant.

The US President threw ZTE, the third-largest telecommunications company, a life-line on Sunday after the company said it would have to end “major operating activities” due to the US government’s changes to its trade restrictions.

Mr Trump tweeted: 

It came after the Trump government stopped US firms from exporting essential microchips to ZTE for seven years due to a finding that ZTE had sent illegal shipments to Iran and North Korea, thereby violating an agreement with the US government.

According to the head of global emerging markets and Asia Pacific equities at UBS Asset Management, Geoffrey Wong, the fractious trade relationship between China and the US remains a cause for vigilance.

Speaking to Nest Egg, Mr Wong explained that China aims to be independent of foreign technology by 2025, leading to a “fundamental tension” between China and the US.

It will also lead to a key investment focus on semiconductors and telecommunications companies, Mr Wong added.

Continuing, Mr Wong explained the touted sanctions on ZTE would have meant the end of the company for the next few years at least, due to the critical nature of the US-supplied components.

Another major Chinese telecommunications equipment company, Huawei, is also facing similar action with reports it also violated the settlement with the US government.

However, if the Trump administration had flagged it wanted to impose sanctions on Huawei, “it would have had a very similar devastating impact on Huawei. These would have been very aggressive moves”.

Calling Mr Trump’s tweet a “180 degree turnaround”, Mr Wong said the area remains one to “watch pretty carefully”.

Trump and ZTE: ‘something to watch pretty carefully’
President Donald Trump
nestegg logo
subscribe to our newsletter sign up
FROM THE WEB
Recommended by Spike Native Network
Anonymous - It's interesting that among the investment options referred to, real estate has not earned a mention. When Ms Kohler informs us that investments in.......
Anonymous - To the extent that the shareholder only withdraws their original investment amount, there is no issue. However once any amount above that investment.......
Ro TIMMS - Now that we are all firmly in the grip of the "Third Industrial Revolution"...... how long before you envisage "Flying Cars" ???....
Neil and Julie Fitzg... - Excellent article. Reading it has just answered my nagging doubt about sufficient funds, we could retire right now.....