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  • On this episode of China Uncensored,

  • gosh, with all those sanctions on Iran and North Korea,

  • how do they keep developing their nuclear programs?!

  • Hi, welcome to China Uncensored,

  • I'm your host Chris Chappell.

  • You know international law is a funny thing.

  • Why, I can hardly stop laughing.

  • There is no world government, officially,

  • so how do you get countries of the world

  • to work together when there's really

  • no way to enforce anything?

  • Take for instance American trade sanctions

  • on Iran and North Korea.

  • The European Union and a number of democratic countries

  • have also had similar sanctions.

  • The idea is,

  • if you restrict trading with these rogue regimes,

  • it'll hopefully stop them from developing nuclear weapons,

  • and generally being horrible to their own citizens.

  • Think of it like some sort of

  • no school lunch for bulliespolicy.

  • But the Chinese regime doesn't mind

  • swapping sandwiches with Iran and North Korea.

  • In fact, China is the biggest trading partner

  • for both of those countries.

  • This makes the rest of the world's sanctions

  • way less effective.

  • Both the Obama and Trump administrations

  • have been repeatedly frustrated by

  • their inability to force China's hand in

  • cracking down on these countries.

  • So what can the US do?

  • Well, the Chinese company ZTE found out.

  • Never heard of ZTE?

  • This is one of their recent TV ads.

  • As you could tell from that commercial,

  • ZTE sells skateboards.

  • No, they actually sell cheap smartphones,

  • like the Blade V7 Lite.

  • Apparently, ZTE is the number 4 smartphone vendor

  • in the US.

  • But smartphones are only a small part of their business.

  • ZTE is also one of the world's biggest makers

  • of telecommunications equipment.

  • But while these kids were doing sick tricks on skateboards,

  • ZTE was doing some extremely illegal tricks

  • behind the US government's back.

  • And eventually, they got caught.

  • An unprecedented US fine for sanctions busting.

  • The Chinese telecoms equipment giant ZTE

  • agreeing to pay more than a billion dollars in penalties

  • and plead guilty to illegally shipping U.S.-made technology

  • to Iran and North Korea.

  • ZTE is a Chinese company,

  • so you might think it wouldn't be bound by the US's sanctions.

  • But 25 to 30% of ZTE's components

  • come from US suppliers.

  • So when ZTE is shipping US-manufactured components

  • to Iran and North Korea,

  • that's illegal according to US law.

  • And since ZTE has a subsidiary company in the US,

  • that gives the US government a legal hook

  • to go after them.

  • With this action,

  • we are putting the world on notice:

  • Improper trade games are over with.

  • Those who flout our economic sanctions,

  • export control laws and any other trade regimes

  • will not go unpunished.

  • They will suffer the harshest of consequences.

  • Yeah, you lousy skateboarding teenagers!

  • The US began investigating ZTE five years ago,

  • after this 2012 report from Reuters.

  • ZTE sold Iran,

  • “a powerful surveillance system capable of monitoring landline,

  • mobile and internet communications”.

  • It was worth millions of dollars.

  • Their selling point?

  • It wasn't Made in China,

  • but in the good old US of A.

  • Through the course of the investigation,

  • ZTE directly or indirectly shipped about

  • 32 million dollars of US-made routers,

  • microprocessors and servers to Iran.

  • Plus it made 283 shipments to North Korea.

  • But that's not the worst part.

  • The worst part is,

  • they lied about it.

  • This top secret document written by ZTE's legal department

  • basically says, “Hey upper management,

  • you know all those illegal things we're doing,

  • like exporting US products to rogue nations?

  • Well, here's some suggestions on

  • how to not get caught.”

  • Obviously they weren't very good suggestions.

  • This unprecedented penalty reflects ZTE's premeditated,

  • egregious scheme to evade U.S. law.

  • ZTE's most senior managers lied to,

  • obstructed and misled investigators for years,

  • only acknowledging the truth starting in March 2016

  • when we caught them red-handed.

  • Well yes, they are acknowledging it now!

  • That's because, after getting caught red-handed,

  • ZTE installed a new chairman and chief executive.

  • And this one issued a formal corporate-style apology.

  • So we're cool, right?

  • Right?

  • At the beginning of this month,

  • ZTE plead guilty to the charges of illegal shipping,

  • as well as a charge of obstructing justice

  • and lying to federal investigators.

  • The judge fined ZTE nearly 1.2 billion dollars

  • although they can save 300 million

  • if they start complying with US restrictions.

  • And ZTE might not be the only Chinese company

  • with its US operations in trouble.

  • Remember that top secret ZTE document?

  • Well, on page 3,

  • it suggests looking at the example

  • of another Chinese telecom company

  • doing the same kind of illegal stuff.

  • They refer to it by the codename “F7”,

  • so there's no way to know...

  • Just kidding.

  • It's Huawei.

  • I mean, what other company

  • was trying to buy 3leaf in 2010?

  • Company “F7” was no mystery to US investigators either.

  • Last year, Huawei was subpoenaed for similar violations,

  • though no official charges have been levied against it yet.

  • So what do ZTE and Huawei have in common?

  • I mean, besides selling US-made components

  • to Iran and North Korea?

  • They both have strong ties

  • to the Chinese Communist Party.

  • ZTE is a publicly traded company,

  • but it's also a partially state-owned enterprise

  • through a complex holding company structure.

  • Huawei is privately owned,

  • but gets generous support from the Chinese Communist Party,

  • including major funding from Chinese state-owned banks.

  • The Party connections could explain

  • why both ZTE and Huawei are trading with countries

  • that have relatively small markets,

  • even when it means putting their US business at risk.

  • As this article puts it,

  • It is not surprising the companies

  • would tailor their export endeavors

  • to further Chinese foreign policy goals.”

  • Policy goals that include

  • supporting the Chinese regime's allies:

  • Iran and North Korea.

  • Back in 2012,

  • the House of Representatives' intelligence committee

  • issued this report,

  • saying ZTE and Huawei specifically

  • were a “threat to US national security interests.”

  • One concern was that both companies had

  • refused to provide details about their operations in Iran.

  • There were other concerns as well.

  • After that report was issued,

  • the US government restricted Huawei and ZTE

  • from selling their telecommunications equipment

  • in the US.

  • For example,

  • they couldn't sell infrastructure equipment

  • to US companies like Sprint and Verizon.

  • And they couldn't sell anything to government agencies

  • without FBI approval.

  • But they both can still sell smartphones.

  • In fact, one in every 13 smartphones sold in the US today

  • are either ZTE or Huawei.

  • So what will be the impact of the recent guilty plea

  • by ZTE about selling US components

  • to Iran and North Korea?

  • Well, if ZTE pays its fine,

  • and stops selling things to Iran and North Korea,

  • it'll get to continue operating here,

  • competing with other smartphone makers

  • like Apple and Samsung.

  • It's unclear though if the US government

  • will end restrictions on ZTE selling

  • telecommunications equipment in the US.

  • So should you go ahead and swap out

  • your exploding Samsung Galaxy

  • for a ZTE Blade V7 Lite?

  • Well, these skateboarders seem to think so.

  • But while you may be safe from explosions,

  • it doesn't mean you're safe from everything.

  • For the record,

  • a ZTE USA spokesperson said,

  • no ZTE devices in the U.S.

  • have ever had the AdUps software

  • which allowed the Chinese government

  • that secret backdoor to monitor your cell phone data.

  • And I totally believe them.

  • I mean, why wouldn't I trust ZTE?

  • So what do you think?

  • Leave your comments below.

  • Thanks for watching this episode of China Uncensored.

  • Once again I'm your host Chris Chappell.

  • See you next time.

On this episode of China Uncensored,

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US Fines Chinese Tech Giant ZTE $1.2 Billion | China Uncensored

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    zijun su posted on 2021/06/23
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