The United States Commerce Department puts export restriction on ZTE. The sanction was imposed for violating export restriction to Iran. With the restriction, all U.S. companies that supply components to the Chinese company have to acquire export license first before shipping their products.

Commerce Department imposed restriction on ZTE Corp for alleged violations of U.S. export controls on Iran. United States found out that ZTE was acting on the opposite direction of U.S. national security interest.

ZTE was discovered to establish a front companies to evade U.S. controls on high-tech exports to Iran. The company was allegedly developing scheme to re-export controlled items to Iran contrary to United States law. ZTE was coordinating the scheme with three other entities, including one in Iran.

With this restriction, the Chinese telecoms company will not be able to freely acquire U.S. products and any American-made equipment or parts. The restriction will take effect on Tuesday.

"This is a significant new burden on trade with ZTE," said senior offcial at the U.S. Commerce Department to Reuters. The official refrained to comment on U.S. government further action against ZTE.

Notice from the Commerce Department will be published next week in the U.S. Federal Register, which also mention that license applications generally will be denied. Nevertheless, ZTE can appeal against the action.

Chinese government was strongly opposed the sanction. China's commerce ministry said that ZTE's technology purchase has helped U.S. to provide tens of thousand jobs in United States. The ministry said export restriction would obstruct that.

"The U.S. move will severely impair normal commercial activities of the Chinese firms. China will continue to engage with the U.S. side on the issue," said a written statement issued by China's ministry as quoted by Shanghai Daily.

Another high ranking official, Foreign Minister Wang Yi as quoted by Japan Times, on Tuesday said, "We don't think this is the right approach." he said in a news conference on Tueday during meeting of China's national legislature.

"This approach will only hurt others without necessarily benefiting oneself," he added.

Meanwhile ZTE issued a written statement, pledging to cooperate with U.S. authorities. The company said, "ZTE is fully committed to compliance with the laws and regulations in the jurisdictions in which it operates. ZTE has been cooperating, will continue to cooperate and communicate with all U.S. agencies as required. The company is working expeditiously toward resolution of this issue."

Although ZTE and other China-based company are developing their own technology, but they still depend on American suppliers for chipsets and components. Therefore, restriction will harm both U.S. suppliers and ZTE alike.

As Commerce Department imposed export restriction on ZTE, the Chinese company will not be able to acquire U.S. products freely. American suppliers will have to acquire export license prior to shipping their product to ZTE.