Briefing: ZTE sells Shenzhen property after huge losses

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Cash-Strapped ZTE Sells Shenzhen Property–Caixin Global

What happened: ZTE, China’s second biggest telecom equipment manufacturer, has signed an agreement to transfer land and property holdings in Shenzhen. In the first half of this year, the company suffered record-breaking losses after the US government singled it out for selling American-made products to Iran. The Trump administration backed off from cutting off ties to ZTE’s US suppliers, but still leveled a $1.4 billion fine in a deal reached in July. ZTE did not specify the total sum it will gain from selling the property in Shenzhen. It did, however, state that its first installment will be worth RMB 2.2 billion ($321 million).

Why it’s important: ZTE stated that it expects to be profitable once again in the third quarter, drawing at least RMB 24 million. According to Caixin, though, ZTE’s net loss may eventually reach RMB 7.8 billion. In addition, on Wednesday, the US Senate introduced a bill proposing to reinstate harsh bans on ZTE if it violates the terms of the July agreement. The bill has yet to pass, but it reflects ongoing scrutiny of the company in the US, as well as deeply held suspicions towards the actions of Chinese enterprises.