US Commerce Department allows limited service for major telco

The US Commerce Department issued a "limited service authorization" to ZTE on Tuesday, allowing some of the Chinese telecom company's business activities to resume temporarily.

The authorization from the department's Bureau of Industry and Security allows China's No. 2 telecommunications equipment maker, slapped with a ban in April, to conduct business necessary to maintain existing networks and equipment in the United States.

The temporary authorization allows parties to support ZTE phones, disclose to the company cybersecurity vulnerability, and make or receive a "limited transfer of funds" to or from the Shenzhen-based company, according to the bureau's announcement published on its website on Tuesday.

The authorization, dated July 2, runs until Aug 1. ZTE shares on the Shenzhen Stock Exchange rose by the maximum daily allowed 10 percent on Tuesday.

The authorization came as US President Donald Trump looks to lift the seven-year ban on ZTE initially imposed in April, politico.com reported on Tuesday.

It lets ZTE conduct business involving contracts and devices offered before the ban went into effect, according to the report.

The waiver does not permit companies to begin any new business with ZTE, however, according to an Agence France-Presse report.

In April, the Commerce Department banned the sale of crucial US components to the company. The US has accused ZTE of violating laws by illegally shipping US goods to Iran and breaching a deal reached last year, according to earlier media report.

US companies provide up to 30 percent of components in ZTE's equipment. Following the ban, ZTE Corp said it would suspend major operations.

But in an agreement struck last month, Washington offered to lift the ban if the company agreed to pay an additional $1 billion fine, replace its board of directors, retain outside monitors and put $400 million in escrow to cover any future penalties.

ZTE took one of those steps last week, removing its board of directors, naming eight new board members and firing top executives.

The US Commerce Department move came shortly before the first round of tariffs China and the US vowed to impose on each other is scheduled to take effect on Friday.

The US is set to place hefty tariffs on $34 billion worth of additional goods from China on Friday. In response, China has vowed to retaliate in kind with its own tariffs on US products, mostly on soybeans and other farm produce.