ZTE Deal Tangles with US Congress

The Wall Street Journal today has a story that indicates the Senate, led by Marco Rubio, wants to amend the National Defense Authorization Act to block the deal the Administration made with ZTE to resume their trading with the US.  The House has no such provision in its bill which means there is some time left to think about this whole issue.  It will go to a Conference Committee to resolve if it passes the Senate in this form. 

I was not in favor of lifting the sanctions on ZTE, but some things have made it more difficult to continue them.  First, Xi Jinping has inserted himself in this and made an appeal directly to the President.  It has been described by several news outlets as a direct appeal on a problem that he was having with ZTE being sidelined, and a lot of Chinese people were out of work (the President said this in a Tweet). 

Several Senators have said ZTE was spying on the US, and a few of them have said they did so as agents of the Chinese Central Government.  There is no doubt about that, so you can ignore any denials made by ZTE and the government.  When you mix state owned companies and government entities together as the the Chinese do, there is no line separating what the government wants and what a Board might want to do in their own business interests.  The fact is, they got caught - clearly, as plain as printed documents telling their employees how to do it and what to do to get around sanctions.  ZTE did what they were told to do, and not what the leaders of the company might have wanted to do.  When Alibaba sold Alipay without telling Yahoo, a major shareholder, we saw what can happen when business thinking got in the way of government strategy.  Businesses lose every time.  We often forget that Chinese businesses are not like ours, and policy decisions have to take that into consideration. 

Last, as much as I would like for Senator Rubio to succeed, the boat has left the pier and the ship is far out to sea.  The President has an absolute right to do deals with the Chinese and he did one.  I don't like it and the Senator doesn't like it, but the deal is done.  Get over it and move on.