Sweden is banning Chinese tech companies Huawei and ZTE from building new high-speed wireless networks after a top security official called China one of the country's biggest threats.

The Swedish telecom regulator said Tuesday that four wireless carriers bidding for frequencies in an upcoming spectrum auction for the new 5G networks must not use equipment from Huawei or ZTE.

Wireless carriers that plan to use existing telecommunications infrastructure for 5G networks must also rip out any existing gear from Huawei or ZTE, the Swedish Post and Telecom Authority said.

The agency said the conditions were based on assessments by the Swedish military and security service. Huawei said it was “surprised and disappointed” by the rules.

Sweden is the latest country to prohibit Huawei from playing a role in building 5G networks and its decision is likely to add to tensions between the Chinese government and Western powers. U.S. officials have waged an intense lobbying campaign in Europe to persuade allies to shun the company, saying Huawei could be compelled by China's communist rulers to facilitate cyberespionage. The company has consistently denied the accusations.

The ban means more opportunities for Huawei's main rivals, Swedish company Ericsson and Finland's Nokia.

New 5G networks, which are expected to usher in a wave of innovation such as smart factories and remote surgery, are considered critical infrastructure. Klas Friberg, the head of Sweden’s domestic security service, known as SAPO, said Tuesday that foreign powers have intensified their intelligence activity in recent years so 5G networks should be built in a secure way from the start.

“China is one of the biggest threats to Sweden," Friberg said. “The Chinese state is conducting cyber espionage to promote its own economic development and develop its military capabilities. This is done through extensive intelligence gathering and theft of technology, research and development. This is what we must consider when building the 5G network of the future."

Huawei denied it was a security risk.

“Huawei has never caused even the slightest shred of threat to Swedish cyber security and never will," it said. "Excluding Huawei will not make Swedish 5G networks any more secure. Rather, competition and innovation will be severely hindered.

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