Sweden’s ban on Tuesday of Huawei Technologies and ZTE Corp from its 5G networks – which has already drawn a strong rebuke from Beijing – did not surprise observers. It is the blunt reference to China as a threat to national security that did.

For its part, Beijing seems ready to take retaliatory measures, casting doubt on future business in China for the Sweden-based telecommunications giant Ericsson, Huawei’s nearest rival in 5G technology.

According to the Swedish government, the nation’s telecoms regulator, PTS, gave companies taking part in the spectrum auction next month a deadline of January 1, 2025, to remove Huawei and ZTE equipment from their existing infrastructure.

PTS added that its decision followed advice from the country's armed forces and security services, which described China as “one of the biggest threats against Sweden”.

Stockholm’s decision, analysts say, would apply to Sweden’s entire 5G network, without the technical – or, some say, artificial – distinction between the core and noncore parts of the network favoured by some other countries that are trying to tread a careful line to prevent Chinese retaliation.

One of them is Germany, where Chancellor Angela Merkel has been accused of postponing the introduction of a new IT Security Act that could apply limits on Huawei, which has worked closely with the leading German telecoms provider, Deutsche Telekom.

In July, Britain ordered Huawei equipment to be purged completely from its 5G network by 2027, becoming one of the first European countries to do so.

Italy has put up costly bureaucratic hurdles for operators using high-risk vendors, making it uneconomical to choose Huawei or ZTE.

Tim Rühlig, an expert on EU-China relations at the Swedish Institute of International Affairs, said that Swedish authorities banned Huawei in the most explicit way possible.

“Sweden could have done something similar [to Italy] and ban Huawei in silence. Today’s decision shows that Sweden is up to taking a clear stance,” Rühlig said.

Jan Weidenfeld, of the Mercator Institute of China Studies, a Berlin-based think tank, said that “currently, Europe is playing chicken, seeing what other countries are doing on 5G”.

“Countries like Sweden, which has a sizeable economy, coming out with such a strong statement on such a sensitive topic to the Chinese side, makes a difference on how Europe talks about this issue.”

Diplomatic relations between Sweden and China have been tense ever since Beijing detained Gui Minhai, a mainland-born Hong Kong bookseller who is a Swedish citizen, in 2015. Earlier this year Gui was sentenced to 10 years in prison for “illegally providing intelligence for overseas entities”.

While the Swedish move on 5G is not surprising to observers, China has reacted strongly, demanding that Stockholm reconsider the decision.

In a sign it might retaliate, China’s telecoms regulator issued a notice on Tuesday calling for stricter supervision of foreign telecoms companies in the country.

Ericsson is the second-biggest supplier of 5G equipment worldwide, trailing only Huawei. It was also the only foreign company winning bids in China Mobile’s 5G roll-out earlier this year, accounting for about 11 per cent of its 5G base stations. Nokia, based in Finland, has not won any share at all.

“It could be that some of the European vendors will sell less in China going forward if the Chinese are selling less in Europe going forward,” Kjell Johnsen, the chief executive of Swedish-based telecoms operator Tele2, said.

A spokesman for the Chinese embassy in Stockholm rejected accusations that Chinese firms Huawei and ZTE constituted a threat to Sweden’s national security.

“We urge the Swedish government to abide by the market principles of open development and fair competition, and reconsider the relevant decision,” the spokesman said on the embassy’s website.

“We are resolutely opposed to abusing the concept of ‘national security’ and … rejecting specific enterprises from specific countries,” he added.
The Chinese government has insisted that Huawei operates separately from the state.

A Huawei spokesman also criticised characterising the company as a risk. “There are no factual grounds to support allegations of Huawei posing any security threat,” the spokesman said. “The exclusion of Huawei is simply based on groundless presumption and is unfair and unacceptable.”

ZTE did not immediately respond to requests for comment.