China asks U.S. to amend ZTE business ban - sources

BEIJING (Reuters) - China has asked the United States to amend a seven-year ban on American companies selling components and software to Chinese telecom equipment firm ZTE Corp, two sources with knowledge of the matter said on Friday.

FILE PHOTO: A ZTE smart phone is pictured in this illustration taken April 17, 2018. REUTERS/Carlo Allegri/Illustration/File Photo

The appeal came during trade talks in Beijing this week between senior officials from both countries aimed at heading off a trade war.

Washington imposed the ban last month, accusing ZTE of breaking an agreement to punish employees after the Chinese maker of smartphones and telecoms gear shipped U.S. goods to Iran in violation of U.S. sanctions.

While U.S. officials have said the action against ZTE was not related to broader trade policy, the move has been seen by many in China as part of the broader trade spat playing out between the world’s No.1 and No.2 economies.

The sources, who declined to be named because they were not authorized to speak publicly about the talks, said Chinese negotiators asked the U.S. side to listen to ZTE’s appeal, take into account the company’s efforts to improve its compliance and amend the ban.

China’s Ministry of Commerce said in a statement earlier on Friday that Chinese officials had made “solemn representations” over the ZTE case to the U.S. delegation.

It said the U.S. officials, for their part, said they “attach importance to China’s representations and will report China’s stance to the U.S. president,” in reference to U.S. President Donald Trump.

There has been no public read-out of the talks yet from the U.S. side.

The ban on sales to ZTE, which is heavily reliant on imports of U.S. chips, had threatened to scupper the Chinese firm’s smartphone business. It has also underscored China’s heavy reliance on semiconductor imports amid growing trade tensions with the United States.

ZTE has said the ban was unacceptable and threatened its survival.A commerce ministry spokesman said after the ban was announced last month that China would take any necessary measures at any time in response to the U.S. move against ZTE.

Reporting by Zhang Shu, Lusha Zhang and Se Young Lee in BEIJING, and John Ruwitch in SHANGHAI; Editing by Darren Schuettler and Martin Howell