Canada's public safety minister said Friday (Canadian time) that the country won't be deterred by Chinese pressure after China threatened reprisals if Huawei was banned from supplying equipment for 5G networks, highlighting the growing rift between America's neighbor and the emerging superpower.
There are accusations that the telecom giant is controlled by China's ruling Communist Party or is required to facilitate Chinese spying.
The US, Australia, Japan and other governments have imposed curbs on use of its technology.
Public Safety Minister Ralph Goodale said Canada has been abundantly clear it will not compromise national security.
"It's a difficult challenge but we'll not be deterred by what we believe to be right and what we believe to be in the interests of Canada," Goodale said.
Lu Shaye, China's ambassador to Canada, warned Thursday of repercussions if Canada bars the firm from its new 5G network.
"One of the things that is of concern in this situation is the blending of Chinese commercial interests with Chinese political positioning and consequences. That's something that I think should be of concern to Canadians and people around the world," Canadian Prime Minister Justin Trudeau said.
Canada and its security agencies are studying whether to use equipment from Huawei as phone carriers prepare to roll out fifth-generation technology.
5G is designed to support a vast expansion of networks to facilitate medical devices, self-driving cars and other technology. That increases the risk of potential security failures and has prompted governments to treat telecom communications networks as strategic assets.
But the arrest of Huawei executive Meng Wanzhou in Canada on December 1 at the request of the United States has created a growing diplomatic rift between China and Canada. Meng is the chief financial officer of Huawei and the daughter of its founder.
The U.S. wants her extradited to face charges that she committed fraud by misleading banks about Huawei's business dealings in Iran.
China detained former Canadian diplomat Michael Kovrig and Canadian entrepreneur Michael Spavor 10 days after Meng's arrest on allegations that they were "engaging in activities that endanger the national security" of China in an apparent attempt to pressure Canada to release her.
China also sentenced another Canadian, Robert Schellenberg, to death Monday in a sudden retrial of his drug-smuggling case.
John McCallum, Canada's ambassador to China, said the path that China is on is not in their interest.
"It's not in the interests of corporate China if when they run into trouble internationally the Chinese government arrests people to use as bargaining chips," McCallum said.
"That is the perception of much of the world and that is not good for the reputation of Chinese business people."
On Thursday, Lu warned Canadian Foreign Affairs Minister Chrystia Freeland not to use next week's World Economic Forum meeting in Davos, Switzerland, to press for support against China. He also said Canada's arrest of Meng was an act of "backstabbing" by Canada and called it "politically motivated."
Freeland has said the detention of two Canadians will be at the top of her agenda in Davos and didn't back down from her position after hearing about the ambassador's remark.
Canada maintains Meng's arrest is a matter of rule of law and says it is acting according to its international treaty obligations.
Trudeau said Canada would continue to speak out. "A lot of countries share the concern," Trudeau said.
Huawei's image suffered a new blow last week when Polish authorities announced that a Chinese employee was arrested on spying charges. Huawei said it fired the employee and the allegations were unrelated to the company.
Meng is now out on bail in Canada and is awaiting extradition proceedings. A hearing is scheduled for next month.
McCallum said his top priority is to get the detained Canadians home and save the life of the third Canadian. He briefed lawmakers on Parliament Hill on Friday and said he's been talking to Canadian businesses that work in China. He still thinks China will play an important role in Canada's future, noting that the country's tourism industry, farmers and universities are all highly dependent on China.
"I think it is best we move forward as much as we can under the circumstances," he said.
Canada had previously talked about doing a possible free trade teal with China, but McCallum said that's certainly not an issue Canada is considering now.