Economy, Sci & Tech

China Angered by US Export Controls on ZTE

China Angered by US Export Controls on ZTE
China Angered by US Export Controls on ZTE

China's Foreign Ministry expressed anger at the US Commerce Department's plans to place export restrictions on Chinese telecoms equipment-maker ZTE Corp. for allegedly violating US export controls on Iran, which may strain relations further between the two largest trading nations.

The restrictions took effect on Tuesday, according to a new Reuters report, and apply to any company worldwide that wants to ship US-made products to ZTE in China. Those companies are not the target of the export curbs on ZTE, Reuters reported.

"China is opposed to the US citing domestic laws to place sanctions on Chinese enterprises," Chinese Foreign Ministry spokesman, Hong Lei, told a daily news briefing.

"We hope the US stops this erroneous action and avoid damaging Sino-China trade cooperation and bilateral relations."

China and Iran have close diplomatic, economic, trade and energy ties, and the former was active in pushing counterparts in P5+1 (the US, Britain, France and Russia, plus Germany) to reach an agreement with Iran over its nuclear program.

The US restrictions will require ZTE suppliers to apply for an export license before shipping any US-made equipment or parts to ZTE, potentially complicating the Chinese firm's ability to acquire US products.

Trade in shares of ZTE, which also sells consumer devices such as smartphones in the United States, was suspended in Hong Kong and Shenzhen on Monday.

ZTE said in a statement issued over the weekend that it was "highly concerned" at media reports of the US plan.

The Commerce Department investigated ZTE for alleged export-control violations following reports by Reuters in 2012 that the company had signed contracts to ship millions of dollars worth of hardware and software to Iran's largest telecoms carrier, Telecommunications Company of Iran, as well as a unit of the consortium that controls it.

The United States has long banned the sale of US-made technology products to Iran and the Commerce Department's investigation focused on whether ZTE had acquired American products through front companies and then shipped them to Iran in violation of US sanctions.

As one of the world's largest telecoms equipment makers, ZTE has operations in 160 countries, according to its website. It is also a major manufacturer of mobile handsets.

ZTE has only recently relaunched their business-to-consumer enterprise in Iran, which was reported earlier at an event in Tehran.

Besides ZTE, the export curbs will also apply to two of its Chinese affiliates, ZTE Kangxun Telecommunications Ltd. and Beijing 8-Star, as well as ZTE Parsian, which is an Iranian company tasked with distributing the company's phones and equipment in the Iranian market.