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EU may impose sanctions on China's Huawei and ZTE

China’s leading telecom firms Huawei and ZTE are again coming under attack from foreign forces, with the European Union reportedly lining up trade duties against the companies due to their involvement in "illegal" trade subsidies.

The claims come courtesy of an exclusive from news agency Reuters, which cited “people close to the matter” in its report. According to the sources, the European Commission (EC) is unhappy with the Chinese state’s close support of Huawei and ZTE and will issue a formal warning to clamp down on alleged price dumping from China.

Reuters’ confidants reported concern in the EU over the export rebates given to Chinese telecom manufacturers from the government and the loans offered by state-run banks which enable them to sell network equipment cheaply in emerging markets.

"We want to send a warning to the Chinese, a letter of intent that if they don't change their practices, there will be duties," said “one person involved”, adding that EU trade chief Karel De Gucht had the full backing of EC President Jose Manuel Barroso over the move.

EU officials have told Reuters the action on Huawei and ZTE forms part of a wider effort to protect Europe’s trade with China, with the Commission also prepared to levy duties on billions of dollars of Chinese solar panels from June.

A ZTE spokesperson responded to the claims by stating, "We are confident that our practices are in line with regulations in China and other markets."

Huawei, meanwhile, was defending its reputation just last week, as founder and CEO Ren Zhengfei denied his company was a cyber-threat to the US. Ren’s interview was believed to be the first he has ever given to foreign media and may have been motivated by the series of accusations fired from the US over the conduct of Huawei and its Chinese counterparts.