Huawei Technologies (Shenzhen, P.R.C.), China's biggest telecoms equipment manufacturer, said it would not pursue new business in Iran after a U.S.-based watchdog said that authorities in Tehran were using the firm's equipment to track dissidents.
It said in a statement posted on its website on Friday that it "will voluntarily restrict its business development (in Iran) by no longer seeking new customers and limiting its business activities with existing customers."
"Huawei's business in Iran has been in full compliance with all applicable laws and regulations including those of the UN, the United States and the European Union," it added.
The U.S.-based pressure group, United Against Nuclear Iran , welcomed the move but called on Huawei to withdraw completely from the country. In November, the group accused Huawei of "helping to strengthen and bolster the capabilities of a regime that is pursuing an illegal nuclear weapons program and is the world's leading state sponsor of terrorism."
Huawei said it will continue to provide "necessary services" for communication networks already delivered or being delivered to Iran.
China has resisted Western proposals for sanctions that would undermine its close economic ties with Iran, its third largest crude oil and fifth largest iron ore supplier.
Beijing has also denounced the United States and European Union  for imposing their separate unilateral sanctions on the country.
(Reporting by David Stanway; Editing by Sanjeev Miglani)