Manufacturing News

China Focus: China firmly opposes U.S. sanction against ZTE

China has voiced its "strong dissatisfaction" and "firm objection" to U.S. sanctions against telecom equipment maker ZTE Corp., saying the move will "hurt others without benefiting itself."

"This move will severely impair the commercial activities of Chinese firms. China will continue to engage with the U.S. side on the issue," according to a Ministry of Commerce statement Tuesday.

The United States on Monday announced export restrictions on ZTE and three affiliated entities for alleged violation of U.S. export controls on Iran.

"We do not think it [trade restrictions on a Chinese firm] is the right approach to handle economic and trade disputes. This approach will only hurt others without necessarily benefiting oneself," said Foreign Minister Wang Yi at a press conference Tuesday in Beijing.

Wang called for the two sides to cooperate.

Trading on ZTE stocks in Hong Kong and Shenzhen was suspended from Monday as a result of the export restrictions.

In a statement, the Shenzhen-headquartered company stressed that it complied with the laws and regulations of all jurisdictions in which it operates, and it will continue to cooperate with the U.S. side to resolve the issue.

Major Chinese telecom equipment makers, including Huawei and ZTE, have been subject to frequent questioning by U.S. investigators over U.S. information security since 2011, which undermined major deals with U.S. companies.

"Besides the upcoming election in the U.S., it is likely that the cause is driven by the desire to restrict free trade to contain the development of the Chinese telecommunication sector," said Xiao Yaofei, a professor with Guangdong University of Foreign Studies.

Huawei and ZTE have been active in the U.S. consumer electronics market since the latter half of last year, and the Chinese telecommunication industry, especially terminal products, has gone from strength to strength, said Xiao.

"The U.S. does not want to lose its dominance [...] it is obviously the 'right time' to 'give special treatment' to Chinese companies under the guise of security and international politics," he said.

Earlier on Monday, China's Foreign Ministry also urged the United States to revoke its decision to avoid damage to trade cooperation and bilateral relations.

ZTE offers quality products and services, creates jobs and contributes to economic and social development in the United States, a ZTE senior executive told Xinhua on Tuesday on condition of anonymity.

So far ZTE has 14 offices and 6 research centers in the United States, with 80 percent of its 350 staff being Americans. ZTE currently holds about 7 percent of the U.S. smartphone market, making it the fourth largest manufacturer in the country, after Apple, Samsung and LG. It is also a sponsor of five NBA teams.

The U.S. Commerce Department said Monday in a public notice that it was imposing restrictions because the company had violated the U.S. export controls on Iran.

The department has added ZTE Corp., ZTE Kangxun, Beijing 8-Star, and ZTE Parsian to the Entity List under the Export Administration Regulations, accusing them of re-exporting controlled items to Iran.

The restrictions will make it difficult for the companies to acquire U.S. products as ZTE suppliers must now apply for an export license before shipping any American-made equipment or parts to ZTE.

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