US and UK impose blocks on China's ZTE

The UK and the US have made moves against one of the largest telecommunications equipment makers in China, adding the firm to an ever-expanding list of companies facing restrictions put in place by western nations over national security fears.

On Monday night, America's Commerce Department banned all US companies from selling any components to the Chinese telecommunications equipment manufacturer for seven years after it was charged with violating a 2017 settlement over allegations that it had illegally sold equipment to Iran and North Korea.

"This egregious behaviour cannot be ignored," Commerce Secretary Wilbur Ross said when announcing that move.

ZTE had pleaded guilty to criminal charges and paid $1.2bn to the United States as part of its 2017 settlement agreement.

Also on Monday evening, Britain's National Cyber-Security Centre warned the UK telecommunications sector in a letter of the potential risks to national security linked to use of ZTE's equipment.

The NCSC's move meant the Asian company aws effectively cut off from billions of pounds-worth of potential contracts to upgrade the UK's telecoms infrastructure to 5G and towards full fibre networks.

The steps taken by the two watchdog agencies came close on the heels of recent aggressive moves by the White House, which had previously enlisted the Committee on Foreign Investment in the US, a little-known national security body, to enforce changes to multiple deals with ties to China.

In a statement on Tuesday morning, ZTE said it had been made aware of the US order and that it would be "assessing the full range of potential implications" to the company, which suspended trading of its shares in Hong Kong and Shenzhen shortly after.

The US Commerce Department claimed the move was not linked to similar actions carried out in recent weeks by the White House, highlighting the fact that ZTE's violations were initially looked into by the Obama administration.

However, many experts felt these new sanctions were simply part of a growing anti-Chinese sentiment stemming from, not only London and Washington, but also in the likes of Germany, Australia and Canada.

They were also expected to add to the rapidly escalating economic tensions between Washington and Beijing, which have been at loggerheads in a rhetorical trade war, with both threatening to impose tariffs on $150bn-worth of goods traded with the other.

According to some observers, the sanctions could prove to be devastating for Shenzhen-based ZTE, which was originally an offshoot of China's aerospace ministry, given its dependence on American firms for between 25% to 30% of the components used in its gear.