China Warns Swedish Companies Could Suffer From Huawei Ban

(Bloomberg) -- The Chinese foreign ministry warned Sweden that it should revoke its ban on Huawei Technologies Co. to avoid hurting prospects for Swedish companies.

The announcement comes a day after Swedish authorities blocked operators from using Chinese vendors Huawei and ZTE Corp. as part of the country’s 5G roll-out. The decision was the latest in a series of restrictions by governments around the world on the Chinese companies, after continued pressure from the U.S. to avoid potential security risks in 5G networks. China was Sweden’s eighth-largest export market in 2019, according to Sweden’s official statistics agency.

“The Chinese market is open to European companies including Swedish companies, but the Swedish side without any evidence, has discredited China and cracked down on China’s telecom companies,” Chinese foreign ministry spokesman Zhao Lijian said in a press briefing Wednesday. “Sweden should adopt an objective and fair attitude and address its wrong decision so as to avoid negative impacts to normal economic and trade cooperation between the two sides and avoid bringing any negative impacts to Swedish companies’ operations in China.”

Huawei’s biggest rival in the market for cellular radio equipment, Sweden’s Ericsson, is building the next generation of wireless technology for all of China’s three major cell-phone operators and derives about 10% of its sales from the country. The company on Wednesday reported earnings that were stronger than analysts expected as the Chinese contracts, which initially were loss-making, have now started contributing to profits.

According to the Swedish Security Service, allowing Huawei or ZTE products could be detrimental to national security, as “Chinese state and intelligence services can influence and exhort pressure” on the companies. Swedish Prime Minister Stefan Lofven said the decision nevertheless shouldn’t be seen as directed against China.

“The whole purpose of the legislation we have introduced is to ensure Sweden’s security,” Lofven told news agency TT. “It is then up to authorities to assess what can be done and what can’t. And of course we trust the authorities’ assessment.”

The continuing trade war between the U.S. and China has caused the once-tightly knit tech industry to come under pressure. Chinese technology companies including Huawei have expressed strong concerns to local regulators about Nvidia Corp.’s proposed acquisition of Arm Ltd., potentially jeopardizing the $40 billion semiconductor deal, Bloomberg reported.

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With assistance from Bloomberg