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Chinese foreign ministry opposing ZTE trade restrictions

The Chinese government has called for the US to back off from the 'erroneous' trade restrictions it has placed on telco hardware maker ZTE.

The Chinese Foreign Ministry has said it opposes the decision by the United States Department of Commerce to restrict US equipment exports to Chinese telecommunications hardware manufacturer ZTE after allegations of contravening US export controls on Iran.

According to Reuters, the trade restrictions will be in place from Tuesday, and will require companies wanting to ship US-made equipment or parts to ZTE to apply for a licence, with most applications expected to be declined.

"China is opposed to the US, citing domestic laws to place sanctions on Chinese enterprises," Chinese Foreign Ministry spokesperson Hong Lei said.

"We hope the US stops this erroneous action, and avoids damaging Sino-US trade cooperation and bilateral relations."

Along with ZTE, the export restrictions also apply to two Chinese affiliates -- ZTE Kangxun Telecommunications and Beijing 8-Star -- as well as Iranian company ZTE Parsian.

ZTE shares were suspended from trading on the stock markets in Hong Kong and Shenzhen on Monday.

The US Department of Commerce Bureau of Industry and Security explained that despite a deal reached between Iran and the United States, China, the United Kingdom, Germany, France, and Russia in 2015 to lift sanctions in return for Iran not developing a nuclear weapon, its export controls over Iran were not amended.

"The parameters announced on April 2, 2015, for a Joint Comprehensive Plan of Action (JCPOA) by the P5+1 and Iran do not relieve, suspend, or terminate any of the export and other controls in the Export Administration Regulations (EAR) pertaining to Iran or any other country," the BIS said on its website.

"The parameters provide a path for sanctions on Iran to be suspended and eventually terminated in exchange for IAEA [International Atomic Energy Agency]-verified implementation by Iran of its key nuclear commitments.

"As of today and until further notice, all EAR controls pertaining to Iran remain in place, and will continue to be vigorously enforced."

ZTE also faced an investigation by the FBI and US Department of Commerce in 2012 after it was alleged to have arranged a system of sub-companies to illegally export Microsoft, Cisco, Dell, Oracle, and Symantec products to Iran.

Cisco ended its sales partnership with ZTE as a result, with ZTE reporting earnings that were "adversely affected" by the US investigations that year.

Chinese tech giant Huawei was similarly accused of attempting to supply embargoed Hewlett-Packard equipment to a mobile network operator in Iran in the same year.

The Chinese government has itself historically been stringent about its requirements for foreign companies providing services locally. In January 2015, the Chinese government released a document outlining new rules for tech companies that provide Chinese banks with hardware and software, demanding that these companies reveal their source code, submit to audits, and build back doors into their software and hardware, according to a report by The New York Times.

Objections were raised by foreign business groups, including the US Chamber of Commerce, however, which prompted the Chinese government to say it would review its e-procurement rules.

Questions over whether it is using its own tech companies to procure inside information on foreign governments have also plagued the Chinese government for several years.

Chinese phone manufacturer Xiaomi was in 2014 investigated by the Hong Kong government's privacy authority for purportedly sending user information back to servers in mainland China without its customers' consent, while Huawei was barred in 2013 from both the US and Australian governments' high-speed broadband network projects after it was linked with the Chinese government.

Then-Huawei CEO Ren Zhengfei denied the company's involvement in government espionage, while the US National Security Agency (NSA) was revealed to have itself conducted surveillance on Huawei's networks, email archives, and communications between its top executives, according to documents leaked by Edward Snowden.

ZTE can appeal the US Department of Commerce's trade restriction decision, according to Reuters.

With AAP