• The US Department of Justice is reportedly investigating the tech company Huawei on accusations of breaching sanctions on Iran.
  • The investigation, which sources say has been running since 2016, could anger China.
  • Last week the US slapped restrictions on another Chinese smartphone maker, ZTE, for numerous infractions including breaching Iran sanctions.
  • But China appears to be just as angry at ZTE as it is at the US, slamming the company in reports and even pulling a much-lauded documentary celebrating the company’s innovations.

The US Department of Justice is reportedly investigating Huawei Technologies, a move that could jeopardize the company’s reputation in China.

Since 2016 the Department of Justice has been looking into whether the smartphone supplier breached sanctions by shipping US products to Iran, according to two sources who spoke with Reuters. The probe is reportedly being run out of the US attorney’s office in Brooklyn.

The news comes less than a week after the Department of Commerce banned American firms from selling products and technology to Chinese smartphone maker ZTE for seven years, in part for breaching sanctions against Iran and North Korea.

While the Chinese government was unsurprisingly angered by the US decision – “The move should be regarded as part of the US tactics in its trade friction with China. Targeting technology is like throttling the neck of the Chinese enterprises,” an editorial in the state-run China Daily read – it also slammed ZTE, which could set a worrying precedent for Huawei.

China's top regulator of state-owned enterprises called ZTE's US interactions "stupid and passive" in a recent report.

"Many domestic enterprises are paying a terrible price for ZTE's short-sightedness and dishonesty. Our country's diplomatic layout and image will inevitably be affected," it said.

But an even bigger indicator of China's anger over the situation could be the mysterious disappearance of its much touted propaganda film "Amazing China."

The nationalistic film, produced by the state broadcaster and released nationally, celebrated China's advances in innovation and infrastructure since President Xi Jinping took office five years ago. Students and Communist Party members around the country were instructed to watch the film which glorified the achievements of Chinese companies, including ZTE.

But four days after the US announced its ZTE decision last week, a memo was sent to websites hosting the film and some cinemas to take the film down "until further notice."

"Please follow the instruction seriously," the leaked memo reportedly said.

The instruction appears to have originated from the government's propaganda department, which had hoped the documentary would bring in 1 billion yuan ($158 million) in ticket sales.

It hasn't been a good year for Huawei and ZTE in the US. First, intelligence chiefs said they wouldn't recommend citizens use the Chinese phones as they could be a conduit for foreign surveillance, and then large US retailers, including Best Buy, decided to stop stocking Huawei.