US move will severely affect normal operations of Chinese companies.

ISLAMABAD ( BMZ REPORT )
The Chinese government expressed its “dissatisfaction” after the US commerce department slapped ZTE with sanctions for having allegedly sold telecoms gear to Iran.
The Chinese commerce ministry issued a stern statement on its website following the US decision earlier this week to require ZTE’s suppliers worldwide to apply for export licences before shipping any US-made equipment or parts to the Chinese company. The applications generally would be denied, the commerce department said.
“China expresses its strong dissatisfaction and resolute opposition,” the commerce ministry said. Its remarks were reported by the Financial Times (FT).
“The US move will severely affect normal operations of Chinese companies. China will continue negotiating with the US on this issue,” it added.
And Wang Yi, the country’s foreign minister, also took up the issue, emphasising the government’s dismay. Without mentioning ZTE by name, he said a Chinese company was the subject of US sanctions. “This is an incorrect approach,” he said.
International sanctions against Iran have been relaxed following the nuclear deal in 2015. However, the US has maintained its own sanctions, which have already caught out a number of Chinese firms in other sectors. ZTE is turning into a particularly high-profile case.
An analyst’s note from Nomura referenced by the FT estimated that between 10 per cent and 15 per cent of the components used in ZTE’s networking gear and smartphones came from US-based vendors, including Qualcomm and Altera.
The USA is reportedly set to impose export restrictions on US firms supplying components to China’s ZTE, following allegations that ZTE broke sanctions on Iran.
The restrictions, if applied, would require any US supplier to seek a specific export license for each product they sell to ZTE. While that is an inconvenience, the Reuters news agency reported that such applications will generally be refused.
Effectively blocking ZTE from buying US supplied components for its hardware.
“This is a significant new burden on trade with ZTE,” a senior official at the commerce department told Reuters.
The move follows an investigation dating back to 2012 which claimed that ZTE had shipped goods to Iran, which at the time was under UN sanctions. Although ZTE could have sold goods to Iran, that the products contained US supplied components put them in breach of the tougher US sanctions against Iran.
The USA’s Commerce department is reported to have found documents showing that ZTE managers knew that they were engaging in a deliberate sanctions-busting scheme in order to win the Iranian contracts.