Canada has said that it will club together with the US and ban Chinese telecom equipment giant Huawei from building a secure Canadian government communications network because of possible security risks.
The news follows Monday's announcement that the US was likely to ban ZTE and Huawei from government projects and a government committee claiming that the company was a security hazard.
The general fear appears to be of the two company's alleged links to the military, although none of these have been proved. The US said that any company which uses Chinese gear is opening themselves to be snooped on by hackers working for the Chinese government. Huawei accused the US of "China bashing".
Now Canada has used a national security exception to let it discriminate against China, without violating international trade laws.
These rules allow the government to ban companies deemed as too risky to be involved in putting together the network for carrying government phone calls, emails and data centre services.
According to Reuters, the news was announced by Canadian Prime Minister Stephen Harper's spokesperson at a news conference.
He said that the government was going to be choosing carefully in the construction of this network, and it had invoked the national security exception for the building of it.
The spokesperson hinted that Huawei was not going to be part of a Canadian government security system.
This shows how much closer the Canadians are to the US view on China than they are to that of the UK. In the UK Huawei has been working with MI5 on some fairly hush hush schemes.
Until now, Huawei has been doing well in Canada. It won a contract in 2008 to build telecommunications networks for domestic operators Telus and BCE Bell Canada, and it has even received a $6.6 million grant from the province of Ontario towards an investment by Huawei in research and development.
There is also an element of "cutting their nose off to spite their face" to the announcement. Next year Canadian firms will be fighting over 700 MHz wireless spectrum which is compatible with long-term evolution (LTE) broadband, this is something that Huawei does rather well and cheaply.
But it has not been all bad news for Huawei, the European Commission has delayed a trade case against it and ZTE.
The commission was worried that China could use equipment made by the two companies to spy on certain communications and threaten vital systems through computerised links.
EU Trade Commissioner Karel De Gucht has had problems in trying to gather evidence against the Chinese firms because no European producer has complained and so the case has been delayed. It looks like the European telecommunications companies are fairly happy with Huawei and LTE and don't see a reason for them to be kicked out of the market.