Chinese telecom giant ZTE suspended on Monday trading of its shares in Hong Kong and Shenzhen following the decision by the U.S. government to impose export restriction on ZTE’s American suppliers.
The U.S. Commerce Department imposed the export restriction, which took effect on Tuesday, because ZTE allegedly breached U.S. export controls on Iran. The basis of the department’s restrictions is a 2012 Reuters report that ZTE inked a contract with Telecommunications Co. of Iran, the biggest telecoms carrier in the Middle Eastern nation, to ship hardware and software.
Under the restrictions, American firms must apply for an export license to ship any equipment or parts to ZTE which could damage the company’s production. Hong Lei, China’s Foreign Ministry spokesman, said that Beijing is against the imposition of sanctions on Chinese firms based on U.S. domestic law.
Hong said that China hopes the U.S. would stop its action, which he called erroneous, to avoid damaging trade cooperation and bilateral relations between the two countries, reported Technology News China.
For its part, ZTE – which hold 8 to 10 percent of the global telecom equipment market – said it is cooperating with American authorities on investigations, keeping constant communications with the relevant government agencies and committed to address and resolve all concerns.
ZTE said it is holding its own internal assessment, but would go on with normal operations, save for the shares trading which it suspended. The telecom giant did not give a reason behind the stock trading halt. Its shares in Hong Kong actually closed 3.5 percent up on Friday, reckoned from January, shareprices were down 20 percent, reported Financial Times.
The department is focusing its investigation if ZTE purchased American products using front companies and then exported the finished goods to Iran, which breaches Washington’s long-term prohibition on sale of American technology to Iran.