It has been in dire trouble since April, when the U.S. Commerce Department banned American companies from selling components to ZTE, which also makes smartphones.
Shares in ZTE Corp. fell 42 percent Tuesday in Hong Kong on their first trading day after the Chinese telecoms equipment maker agreed to pay a $1 billion USA penalty to the U.S. government and replace its top managers. When the White House cut a deal with the company last week (imposing a US$1.4 billion fine and a board restructure), Schumer put out a statement calling on Congress to reverse it, saying "There is absolutely no good reason that ZTE should get a second chance, and this decision marks a 180 degree turn away from the president's promise to be tough on China".
As part of the order, ZTE must identify in detail to the Commerce Department all Chinese government ownership and control of ZTE, including public and private shares. In early June, the White House announced ZTE would be able to resume buying US parts after it agreed to pay a $1 billion fine and submit to USA oversight.
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Sen. Tom Cotton, R-Ark., who is one of the co-sponsors of the measure, said that the amendment would likely put ZTE out of business. "The new governance structure will pose challenges for the company's management in the future", Zhongtai Securities said in a note.
The Hong Kong-listed shares of ZTE slid as much as 41% to HK$14.98, their lowest in a year, following a two-month trading suspension, while its Shenzhen shares fell by their 10% limit after it confirmed details of the agreement publicized by the USA government on Monday. Its Shenzhen shares fell by their 10 per cent limit to 28.18 yuan after it confirmed details of the agreement publicized by the USA government on Monday.
During its trading halt, fund managers cut their valuations of ZTE shares, with some lowering valuations of its A-shares to 20.04 yuan per share, or a 36 per cent discount to the closing level on April 16.
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Republicans, who control both chambers of Congress, and Democrats expressed national security concerns about ZTE after it broke an agreement to discipline executives who had conspired to evade US sanctions on Iran and North Korea.
Jeffries said it expected ZTE to pay its penalty in a few days and resume operations next week.
A bipartisan group of United States senators has put a renewed ban on both ZTE and Huawei into an amendment to the 2019 National Defense Authorization Act.
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Zhongxing Telecommunications Equipment (ZTE) Corporation is a Chinese company headquartered in Shenzhen, Guangdong, China.