Chinese Telecom Stocks Tumble on Proposed US Tech Restrictions

Chinese telecommunications equipment stocks experienced a sharp sell-off on Monday after U.S. lawmakers introduced new bipartisan legislation aimed at further restricting technology from nations deemed foreign adversaries. The proposed measures could expand the scope of existing blacklists and target specific components used in sensitive government networks.

Market Reaction

The news triggered significant declines across China's telecom sector, with several companies hitting their daily trading limits. The losses outpaced a broader market downturn, where the CSI 300 index fell 2%.

Key stock movements included:

• Hengtong Optic-Electric: -10%
• Fiberhome Telecommunication Technologies: -10%
• Accelink Technologies: -9.9%
• ZTE Corp.: -3.5%

Other notable decliners included T&S Communications (-8.5%) and Ruijie Networks (-8.5%), according to the source report.

Details of Proposed Curbs

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The legislative push includes the proposed Communications and Technology Transparency Act, which would expand the types of technology that can be added to the Federal Communications Commission's (FCC) "Covered List." It would also streamline the process for restricting products from countries considered to be U.S. adversaries.

A separate bill introduced by four senators on September 25 specifically targets Chinese-made optical transceivers. It would prohibit their use in the federal government's most sensitive national security systems. These components are critical for moving data across high-speed fiber networks, including infrastructure that supports artificial intelligence (AI) data centers.

According to Reuters, the bill names Chinese manufacturers Eoptolink and Zhongji Innolight. Proponents of the measure have cited potential supply-chain and security risks, noting that advanced transceivers can contain reprogrammable firmware.

Broader Context

These proposals represent the latest step in a wider U.S. effort to reduce exposure to Chinese telecommunications technology on national security grounds. The FCC's Covered List already includes equipment produced by giants like Huawei and ZTE.

This follows a July FCC vote to close a loophole that had allowed some products containing components from blacklisted companies to receive U.S. authorization. The new legislation signals a continued focus by Washington on tightening controls over the technology supply chain.