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ZTE reportedly set to face US export restrictions

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Chinese telecoms kit provider ZTE looks set to have severe restrictions placed on its ability to export goods from the US, according to a Reuters report.

The reason for the restrictions, which are set to be imposed by the US Commerce Department this week, is an alleged violation of US export controls on Iran. An investigation dating back to 2012 has been looking into reports that ZTE has been shipping some US-made kit to TCI, Iran’s largest operator.

It seems the US is intending to make and domestic company that wants to export to ZTE apply for a special license, which will probably be denied. If the move does go through ZTE is expected to be especially hard hit when it comes to chip suppliers such as Qualcomm, but it’s likely to have commercial relationships with a lot of other US companies too.

ZTE issued the following statement: “ZTE noted recent media reports relating to a U.S. Department of Commerce investigation. ZTE has been working with relevant U.S. government departments on investigations, maintaining constant communication with relevant departments and is committed to fully addressing and resolving any concerns.

“ZTE will continue with normal operations while conducting comprehensive assessments and will be actively communicating with stakeholders. As a responsible business, ZTE strives to ensure all operational activities adhere to international trade practices and the laws and regulations of host countries.”

In a subsequent report Reuters noted the Chinese government was not pleased. “China is opposed to the U.S. citing domestic laws to place sanctions on Chinese enterprises,” said Chinese Foreign Ministry spokesman Hong Lei. “We hope the U.S. stops this erroneous action and avoids damaging Sino-U.S. trade cooperation and bilateral relations.”

The US, of course, has already placed restrictions on Huawei’s economic activities in the US, citing security concerns, and the two countries recently saw fit to make a public vow to keep the cyber-espionage to a minimum. Meanwhile the FBI is locked in a battle of wills with Apple over access to locked iPhones. This sort of thing seems likely to aggravate the economic relationship between China and the US, and increases the danger of escalating tit-for-tat sanctions.

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