Washington bans Chinese firm over Iran sanctions breach

The United States slapped a seven-year sales embargo of components to Chinese telecoms manufacturer ZTE Corp after being caught illegally shipping US goods to Iran.

The Chinese company paid $890 million (Dh3.26 billion) in fines and penalties after it pleaded guilty last year to conspiring to breach US sanctions. ZTE carried out a promise to sack four senior employees as part of the deal but failed to discipline 35 others as agreed, Reuters reported.

The move comes amid rising tensions between the world’s two largest economies and fears of a trade war after tit-for-tat threats over tariffs. China responded to the supply embargo by saying it was prepared to take action to protect the interests of domestic companies.

ZTE is China’s second largest telecom equipment manufacturer after Huawei Technologies and faces potential ruin with the US supplying more than one quarter of the components for its phones.

ZTE said it was assessing the implications of the US decision and communicating with “relevant parties”.

The company received a second blow on Monday when the UK’s main cyber security agency said it had written to telecoms companies about using ZTE’s services. Its technical director said the “national security risks arising from the use of ZTE equipment or services ... cannot be mitigated”.

Us senators introduced legislation this year to block the US government from buying or leasing telecoms equipment from ZTE or Huawei, citing concern the companies would use their access to spy on US officials.