March 23, 2016 / 4:29 AM / 2 years ago

U.S. grants China's ZTE temporary reprieve on export curbs

WASHINGTON (Reuters) - The U.S. government will give Chinese telecom equipment and smartphone maker ZTE Corp (000063.SZ) a three-month reprieve on tough export restrictions it imposed this month, the Commerce Department said on Tuesday.

The department on March 8 imposed some of the toughest-ever U.S. export restrictions on ZTE for allegedly breaking U.S. sanctions against Iran.

The agency said it would ease the restrictions until June 30.

Experts had said the restrictions would have caused disruption across ZTE’s sprawling global supply chain.

The restrictions would have banned U.S. companies from exporting to ZTE any technology, software or equipment such as chips and processors made in the United States.

The decision would also have prevented software makers from selling typical office applications like Microsoft Windows - or even providing updates.

People wearing facial masks stand next to an advertisement board of ZTE's mobile phone at a bus stop in Beijing, China, March 22, 2016.REUTERS/Kim Kyung-Hoon

The easing, which will suspend the restrictions as of Thursday, could be extended provided that ZTE was timely in performing undertakings and cooperates with the U.S. government in “resolving the matter”, the Commerce Department said. An agency spokesman declined to comment further.

Shenzhen-based ZTE said it continued to work with the U.S. government over the export curbs.

    The restrictions have drawn protests from the Chinese government and rocked ZTE’s business.

    Chinese Foreign Ministry spokeswoman Hua Chunying said she had noted the statements from the U.S. Commerce Department and ZTE.

    “We hope both parties appropriately resolve the issue via continuing to have dialogue and consultations,” she told a daily news briefing in Beijing.

    ZTE’s shares have not traded on the Hong Kong stock exchange for the past two weeks. The company also said last week it was delaying the publication of its annual results while it assesses the impact of Washington’s action.

    The Commerce Department investigated ZTE for alleged export-control violations following Reuters reports in 2012 that the company had signed contracts to ship millions of dollars worth of American-made hardware and software to Iran’s largest telecoms carrier.

    Reporting by Joel Schectman and Susan Heavy in Washington; Additional reporting by Yimou Lee in Hong Kong and Ben Blanchard in Beijing; Editing by Dan Grebler and Lincoln Feast

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