China telecom giant ZTE faces US 'restrictions': firm

ZTE products on display at the Mobile World Congress in Barcelona, Spain on Feb 22, 2016.
ZTE products on display at the Mobile World Congress in Barcelona, Spain on Feb 22, 2016.PHOTO: BLOOMBERG

SHANGHAI (AFP) - Chinese telecommunications equipment giant ZTE said on Monday (Feb 7) that it is facing US government restrictions, after a media report that the company allegedly violated US export controls on Iran.

In statements to the Hong Kong and Shenzhen stock exchanges, ZTE said trading in its shares had been halted over the "United States Commerce Department's proposal to implement export restrictions on the company" but gave no further details.

ZTE is China's second-biggest telecom equipment maker.

News agency Reuters reported that the restrictions mean ZTE's suppliers must apply for an export licence before shipping any US-made equipment or parts to the Chinese company.

The report, which quoted documents and a senior official at the US Commerce Department, said the measures will take effect on Tuesday.

China’s Foreign Ministry expressed anger on Monday at the US Commerce Department’s plans.

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,”he said, without elaborating.

Washington in January eased several restrictions on doing business with Iran, following an international agreement over the country's nuclear programme.

But sanctions tied to accusations that Tehran supports terrorism remain in effect, still largely blocking US companies from business with Iran.

China's Global Times newspaper on Monday quoted a ZTE statement as saying: "ZTE closely complies with international industry rules as well as the laws of foreign countries." Founded in 1985, ZTE offers both telecom equipment and services with customers in more than 160 countries, according to its website.

In January, Norway's public pension fund said it had divested from ZTE because of corruption fears, according to the country's central bank, which manages the fund.

An ethics council that advises the bank said ZTE was facing corruption allegations in 18 countries and the group was or had been under investigation in 10 of them.

ZTE shares fell 1.44 per cent in Shenzhen and jumped 3.51 percent in Hong Kong on Friday, the last session they traded.

Another Chinese telecom giant, Huawei, has in the past been barred from involvement in broadband projects in the United States and Australia over espionage fears due to its alleged ties with the government. Huawei denies any such suggestions.