Feds ease sanctions on Chinese telecom giant

The Obama administration will temporarily pause sanctions on China’s ZTE, one of the country’s top telecommunications equipment manufacturers, Reuters reported.

The Commerce Department earlier this month said it was slapping restrictions on ZTE because of an alleged scheme to re-export items to Iran in violation of U.S. law.

{mosads}Several lawmakers lauded the move as a way to help curb Beijing’s extensive cyber espionage campaign, long believed to be aided by China’s biggest tech companies.

“We hope this sends a strong message to ZTE, to China and to other Chinese telecommunications companies who present serious national security risks not only by evading export controls, but by purposefully compromising supply chain security,” Rep. Adam Schiff (D-Calif.), the House Intelligence Committee’s top Democrat, said in a statement at the time.

The restrictions would have made it harder for ZTE to acquire U.S.-made technology. The penalties were expected to disrupt the company’s global supply chain, according to reports.

Commerce has eased the sanctions until June 30 but said it could extend this pause if ZTE works in a timely fashion to resolve U.S. concerns.

Chinese officials were heavily critical of the sanctions when they were imposed earlier this month.

After the decision to ease up, Chinese Foreign Ministry spokeswoman Hua Chunying told reporters, “We hope both parties appropriately resolve the issue via continuing to have dialogue and consultations,” according to Reuters.

Security experts have long been fearful that digital adversaries like China are using the tech supply chain to infiltrate critical U.S. networks.

The House Intelligence Committee in 2012 released a report that specifically investigated ZTE and Huawei, another top Chinese telecom equipment maker.

“To the extent these companies are influenced by the state, or provide Chinese intelligence services access to telecommunication networks, the opportunity exists for further economic and foreign espionage by a foreign nation-state already known to be a major perpetrator of cyber espionage,” the report concluded.

Schiff said these findings “sounded the alarm on the counterintelligence and security risks ZTE and other Chinese telecommunication companies doing business in the United States pose.”