US President Donald Trump has said he may lift a crippling export ban on Chinese technology firm ZTE and levy a $1.3bn fine instead.
His willingness to strike a deal has stirred controversy in the US, where the company has raised alarms related to national security.
Mr Trump said the current penalty, which led ZTE to halt major operations, has hurt US firms that sell to it.
Democratic Senator Chuck Schumer called the proposal “a wet noodle”.
He said it was a punishment “in name only” and warned the president against taking a softer stance on ZTE in exchange for promises of increased Chinese purchases of US goods.
He said: “Putting our national security at risk for minor trade concessions is the very definition of short-sighted. And frankly, it would be a capitulation on the part of the Trump administration.”
Negotiations about the alternative punishment are ongoing and come amid broader trade negotiations with China. The president also wants China’s help to curb North Korea and its nuclear ambitions.
Mr Trump said there was no deal yet but at the request of Chinese President Xi Jinping he is revisiting last month’s ban, which blocks US companies from exporting to ZTE.
He later added he is not satisfied with the current state of trade talks with China.
“I think that they’re a start, but we need something,” he said.
The export ban is punishment for the ZTE’s failure to comply with a settlement reached over its violations of sanctions against North Korea and Iran.
The president outlined the possible alternative while speaking to reporters in Washington on Tuesday at a meeting with the president of South Korea.
In addition to the fine, he envisions new management, a new board of directors, and requirements for significant purchases of US products, he said.
In a show of disapproval, the Senate Banking Committee voted overwhelmingly to amend a piece of legislation to prevent the president from being able to change sanctions unilaterally.
Maryland Senator Chris Van Hollen, who sponsored the measure, said it was “deeply troubling” that the president was “fighting to protect jobs in China” tied to a company that has been flagged as a security risk by US defence officials.
Congress is also considering other measures to block changes.
Mr Trump on Tuesday addressed his critics, who come from both parties, noting that his administration had imposed the ban initially.
He said: “For those who say, ‘Oh gee, maybe the president is getting a little bit easy … It was this administration that closed it.”
He added that he also had to think about the US companies that do business with ZTE, which employs about 80,000 people and relies on parts from US tech companies to make its smart phones and telecommunications equipment.
“Don’t think we didn’t hear from them,” he said.
Trump faces backlash over possible $1.3bn ZTE fine