World Economy

China’s ZTE Furious Over US Ban on Tech Investments

The denial order severely jeopardizes the survival of ZTE.The denial order severely jeopardizes the survival of ZTE.

China’s ZTE Corp. blasted the US government decision to impose a seven-year ban on its purchases of crucial American components, calling the move “extremely unfair” and “unacceptable”.

The Shenzhen-based communications-equipment maker vowed to protect its rights by legal means without specifying what actions it may take, according to a statement posted on the company’s website. It also said it will continue to resolve the issue through negotiations with the US government, Bloomberg reported.

The forcefully worded statement came days after the US Commerce Department said ZTE had violated the terms of a sanctions settlement and barred the Chinese company from buying any components from US suppliers until 2025. Such a ban would deal a crippling blow to the Chinese company and its aspirations to expand globally.

“The denial order not only severely jeopardizes the survival of ZTE, it also hurts the interests of all the partners of ZTE, including a large number of American companies,” said the company.

The case is adding to rising tensions between China and the US over trade. In response to the ZTE ban, China’s Ministry of Commerce said—twice this week—that it would take necessary measures to protect the interests of its companies. “The action has given way to widespread market concern on the US trade and investment environment,” a spokesman said.

The Chinese firm relies on suppliers from chipmakers Qualcomm Inc. and Micron Technology Inc. to optical developers Lumentum Holdings Inc. and Acacia Communications Inc. The ban may also stop the company from using Google’s Android operating system, the heart of its smartphones.

Shares of ZTE remain suspended in Hong Kong and Shenzhen. Its American Depository Receipts fell 33% on Tuesday after news of the ban, but have recovered some of those losses since.

The US Treasury Department is considering using an emergency law to curb Chinese investments in sensitive technologies, as the (President Donald) Trump administration looks to punish China for what it sees as violations of American intellectual-property rights.

The US government is reviewing the possible use of a law known as the International Emergency Economic Powers Act, said Heath Tarbert, an assistant secretary in the agency’s international affairs office. Under the 1977 IEEPA law, Trump could declare a national emergency in response to an “unusual and extraordinary threat”, allowing him to block transactions and seize assets.

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