In response to China's alleged violations of U.S. export controls on Iran, the United States Commerce Department has announced that it will be imposing strict sanctions on Chinese telecom giant ZTE.
The restrictions, which are set to take effect starting Tuesday, are not exclusive to the Chinese company, as the export limitations also apply to any corporation that is shipping U.S.-manufactured products to ZTE Corp. in China.
The Chinese government is not pleased.
In an angry protest over the United States' decision, the Chinese Foreign Ministry expressed its discontent, stating that the U.S. is stoking tension between the two countries once more. Chinese Foreign Ministry spokesman Hong Lei even went so far as to state America's decision runs the risk of damaging trade between the two superpowers.
"China is opposed to the U.S. citing domestic laws to place sanctions on Chinese enterprises. We hope the U.S. stops this erroneous action and avoids damaging Sino-U.S. trade cooperation and bilateral relations," he said.
Analysts have stated that America's decision to impose export restrictions carry a risk of stoking tensions between the U.S. and China, especially within the world of information technology. Apart from this, other Chinese companies might also retaliate against U.S. firms, using the same strategy.
Nevertheless, the U.S.'s announced export restrictions have already affected the Chinese telecom giant significantly, at least from a financial standpoint. Due to the possible fallout from the announcement, ZTE has opted to suspend the company's shares during Monday's trading in Hong Kong.
ZTE has become the center of controversy since 2012, when a Reuters report alleged that the telecom giant had signed contracts to ship millions of dollars' worth of hardware and software to Telecommunications Co. of Iran, which, of course, was against U.S. policy.
Though a probe by the Commerce Department followed the report, ZTE has maintained that everything the company is doing is within the scope of the law. The telecom giant has also maintained that it has been cooperating with the investigators since the probe started.
With the latest development, however, tensions have once again risen. If any, the U.S.'s announcement has asserted the present administration's uncompromising stance regarding the export of American-made products.
In a lot of ways, the ball is now in China's court.
