Washington and Beijing are reportedly close to a deal to lift a U.S. ban on American firms supplying Chinese technology giant ZTE Corp.,originally imposed over allegations that it violated U.S. sanctions against both Iran and North Korea.
Reuters and The Wall Street Journal, citing unnamed officials, reported early on May 22 that the deal might include China removing tariffs on U.S. agricultural products, as well as buying more U.S. farm goods.
ZTE, hit by a seven-year ban in April that effectively crippled its operations and was threatening to put the giant phone company out of business, would get a major reprieve under the deal.
The development also signaled that the world's two largest economies were stepping back from the brink of a threatened trade war after a round of high-level bargaining sessions.
ZTE did not immediately reply to requests for comment.
White House advisers have said publicly that the ban against ZTE is being reexamined, but they have insisted that the firm would still face "harsh" punishment, including enforced changes of management and board members.
One person told Reuters there was a "handshake deal" on ZTE between U.S. Treasury Secretary Steven Mnuchin and Chinese Vice Premier Liu He during talks in Washington last week that would remove the U.S. Commerce Department's ban on American companies selling to ZTE in exchange for China's purchase of more U.S. agricultural products.
A second person told the news agency that China may also eliminate tariffs on U.S. agriculture products it imposed in response to U.S. steel duties as a part of the deal, and that ZTE could still be forced to replace its corporate leadership, among other penalties.
Both sources said that the deal, while not yet cemented, was likely to be finalized before or during a planned trip by U.S. Commerce Secretary Wilbur Ross to Beijing next week to help finalize a broader trade agreement to avert a trade war.
ZTE, which is publicly traded but whose largest shareholder is a Chinese state-owned enterprise, had been hit with penalties for breaking a 2017 agreement after it was caught illegally shipping U.S. goods to Iran and North Korea.