China telecom giant ZTE faces US 'restrictions'

Chinese telecommunications equipment giant ZTE said on Monday 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 at its request 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.

Asked about the issue, China's foreign ministry on Monday criticised US government actions against the country's companies.

"China is always opposed to US sanctions on Chinese enterprises citing domestic laws," foreign ministry spokesman Hong Lei told reporters in Beijing.

"We hope that the US side can stop such erroneous practices so as to avoid further damage to Sino-US economic cooperation and bilateral relations."

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 percent 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.