ZTE share price slumps over EU/China trade war worries

Fears over a possible trade war between Europe and China have pushed the share price of ZTE to a three-year low over worries its earning will be impacted.

The company saw its Hong Kong-listed shares fall by as much as 8 per cent--the weakest level since late March 2009, with the price having plummeted by about 45 per cent so far this year, according to Reuters.

Discussions between the EU and Chinese officials into allegations that Huawei and ZTE had received government subsidies have recently turned nasty. Beijing is threatening swift retaliation against a range of EU industries if Brussels pushes ahead with an investigation into the two Chinese telecoms vendors, according to the Financial Times.

The latest meeting between the two sides collapsed into acrimony, with the EU now waiting to see what level of co-operation the Chinese would provide in an effort to ward off a formal trade complaint.

The EU's case to open an investigation into illegal subsidies is based upon "very solid evidence" that the two telecoms equipment suppliers benefited from this source of funding, reported the Financial Times.

However, worries over the Chinese reaction, together with pressure from worried EU member states, would seem to have slowed any short -erm move. Karel De Gucht, the EU trade commissioner, is now said not to be considering action before September.

European network vendors have not complained fearing that that any action from Brussels could damage their own business interests in China's fast-growing telecoms market.

For more:
- see this Reuters article
- see this Financial Times article (reg. req.)

Related Articles:
China rejects allegation of dumping by Huawei and ZTE
Huawei rejects EU dumping allegations in trade probe
Sweden fears trade war if EU probes Huawei, ZTE over subsidies
ZTE unveils European ambitions, targets major operators
Huawei sues ZTE for patent infringement in Europe