To save Huawei, the Chinese Communist Party’s official media threatened to block Ericsson in Sweden

Beijing will give Sweden one last chance to lift its ban against communications equipment giant Huawei before taking countermeasures against Ericsson, an official Communist Party media outlet said. The possibility of retaliation prompted Ericsson’s chief executive to launch a lobbying campaign on behalf of Huawei.

  According to official media outlet Global Times, Ericsson’s participation in China’s next round of large-scale 5G construction will depend on whether Stockholm changes its stance on Huawei.

  Swedish regulators banned wireless operators from using Huawei’s 5G equipment in October last year, citing national security concerns. Huawei is challenging the decision in Swedish courts, and the ruling is expected in the coming weeks.

  A spokeswoman for Stockholm-based Ericsson had no comment. A spokesman for Sweden’s Ministry of Foreign Trade did not return a request for comment. Ericsson’s shares fell nearly 4 percent Tuesday, slightly underperforming its peers at a time when the technology market as a whole is weakening.

  The warning in the Chinese media is the latest example of Beijing using its influence in the domestic market to protect its commercial and diplomatic interests. Last year, China restricted imports of goods such as Australian wine and beef after Australia issued a ban on Huawei and called for an investigation into China’s handling of the new crown outbreak.

  After Swedish regulators issued a ban on Huawei last October, Chinese Communist Party officials and government-controlled media said the decision was unfair, that Huawei posed no security risk and that Sweden was trying to protect Ericsson, a leading local Swedish company. They threatened to target Swedish companies doing business in China, including Ericsson and its largest shareholder, Investor AB, the investment company of Sweden’s prominent Wallenberg family, which is a major shareholder in several major European companies.

  The possibility of Ericsson becoming a target for countermeasures prompted the company’s CEO Borje Ekholm to launch a lobbying campaign for Huawei. He criticized Swedish politicians and asked lawyers to help Huawei fight the ban issued by Sweden. He said only 1 percent of Ericsson’s sales come from Sweden, compared with 8 percent from China; the company also employs 13,000 people and has opened a factory in China.

  China is the world’s largest market for 5G equipment. An article in the Global Times on Monday said that China’s four state-owned wireless carriers are recently organizing 5G equipment tests to determine which suppliers to use in the next phase of building a nationwide cellular network.

  In March, China’s Internet, encouraged by the media and Communist Party-affiliated groups, essentially swept the H&M brand of Swedish retailer Hennes & Mauritz AB out of business. This was a boycott of H&M’s previous claim that it would seek to ensure that no Xinjiang cotton was used. The U.S. and British governments, as well as human rights groups, have accused the Chinese Communist authorities of genocide and forced labor in Xinjiang.

  H&M’s insistence on its position has led landlords to close some of the company’s stores in China.

  Jerker Hellstrom, director of the Swedish Center for China Studies and a member of the Sweden-China Trade Council, said the business environment has forced Swedish companies doing business in China to Consider an exit strategy.

  ”I’m not saying that companies are ready to leave China, but for the first time they are thinking very seriously that the challenges are too great,” Hellstrom said, adding that “there are conditions for them to stay in China. What are the benefits of staying in China? They always have to think about that.”