Trump's decision risks escalating tensions with China as the world's two largest economies clash over whether Huawei - the world's largest provider of telecommunications equipment - poses a spying risk to Western infrastructure networks. The US and China are already locked in a trade battle that has seen mounting tariffs, sparking fears the conflict will damage the global economy.
Reacting sharply to Trump's move, Chinese Foreign Ministry spokesman Lu Kang told a media briefing here that China will take measures to defend the interests of Chinese companies. "We have noted the US Department of Commerce decision. China always asks its business to comply with laws and regulations in export control and fulfil their international obligations. We always ask them to abide by other country's laws regulations in their overseas business," Lu said.
"But we are against other countries' unilateral sanctions based on domestic law and practices that abuse export control measures. We urge the US to stop such practice and create favourable conditions for business cooperation. China will take necessary measures to safeguard Chinese business' legitimate rights and interests," he said.
He, however, parried questions over what measures China would take, saying the commerce ministry would come out with a response. Asked whether China would now target US firms in retaliation, Lu said, "as for the foreign firms, so long their operations are lawful, they should not be concerned. In international trade, the basis is mutual respect and mutual benefit". Separately, Huawei in a statement said that "unreasonable restrictions" by the US infringed on its rights.
"Restricting Huawei from doing business in the US will not make the US more secure or stronger; instead, this will only serve to limit the US to inferior yet more expensive alternatives," the telecom giant said. "In addition, unreasonable restrictions will infringe upon Huawei's rights and raise other serious legal issues," it said.
Huawei is already fighting a major legal battle against the US to stave off the extradition of its CFO Meng Wanzhou, who has been arrested in Canada, to face prosecution for violations of American sanctions against Iran. Meng, the daughter of Huawei owner Ren Zhengfei, has been accused of misleading banks about the company's business dealings there.
Huawei alleges that the US is stifling its business as it has emerged as a major competitor for the next generation 5G telecom technology. In the media briefing, Lu while replying to a question whether China views Trump's move as a major escalation of the trade war, said, "we are opposed to other countries making every issue national security and using that as a pretext to suppress other businesses.
"China will defend its business' rights and interests. As for China's view on the executive order (of Trump), we can say that nobody says this as a constructive and friendly gesture," he said. Lu also gave a lukewarm response to remarks made by US Treasury Secretary Steven Mnuchin, one of the lead American negotiators, that he anticipates going to China for more trade talks in the near future.
China always stands for consultations and negotiations to resolve differences, he said, adding that Beijing opted for talks even when the US turned away from negotiations in the past. "But I have to point out that in negotiations there has to be good faith," he said, emphasising respect, equality, mutual trust and good faith.
"One must match words with action. There should be no flip-flopping," he said. Also in a related issue, Lu confirmed that China has formally arrested two Canadians who have been detained in December last year on suspicion of endangering national security.
Michael Kovrig, a former Canadian diplomat, and Michael Spavor, a Canadian businessman based in China, have been arrested in what Canada alleged as tit-for-tat retaliation to Huawei CFO Wanzhou's detention. The timing of their charges also coincides with US ban on Huawei.