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China formally accuses Canadians of espionage as Huawei standoff with Trump administration intensifies

Shoppers browse smartphones at a Huawei retail store in Hangzhou in eastern China's Zhejiang province, Thursday, May 16, 2019. In a fateful swipe at telecommunications giant Huawei, the Trump administration issued an executive order Wednesday apparently aimed at banning its equipment from U.S. networks and said it was subjecting the Chinese company to strict export controls. (Chinatopix via AP)

BEIJING - China on Thursday formally leveled grave espionage charges against two detained Canadians, raising the prospect of harsh punishment for the men caught in a spiraling three-way feud over Trump administration’s treatment of the technology company Huawei.

After holding Michael Kovrig and Michael Spavor in an undisclosed locations since December, China's confirmation of the formal charges came just as the U.S. government all but banned American companies from doing business with Chinese tech giant Huawei, a move that could badly cripple a firm considered by China to be a national symbol of industrial prowess.

China's Foreign Ministry confirmed that prosecutors charged Kovrig with "gathering state secrets and intelligence for overseas forces" and Spavor with "stealing and providing state secrets to overseas forces." The men were charged "recently," ministry spokesman Lu Kang said without giving more specific timing.

In the last six months, the timing of Chinese action against Canadian citizens has reinforced suspicions that Beijing is targeting a close American ally in retaliation for what China says is an unfair American effort to hobble Huawei and seize one of its executives - a campaign that it says is aided and abetted by the Canadian government.

"Everything in China is done in accordance with law," Lu, the Chinese government spokesman, told reporters Thursday. "We hope Canada will not interfere with, or comment casually on, other countries' lawful practices."

Citing Huawei's threat to U.S. national security, the Commerce Department had announced hours earlier on Wednesday that it named Huawei to the so-called "Entity List." The blacklist is known to some as a "death penalty" because global companies often struggle to survive once they are starved of doing business with American companies or sourcing American parts.

The U.S. move, which administration officials said were motivated in part by faltering trade discussions with China, was likely seen as deeply hostile by Chinese leaders and a stark reminder by Washington of China's dependence on the American supply chain. Chinese officials were alarmed and outraged in 2016 when the Commerce Department similarly put ZTE on the "Entity List," which threatened to put that Chinese tech giant out of business practically overnight.

Lu on Thursday slammed the Trump administration's "unilateral sanctions" as an abuse of export control measures and said China would take steps to defend itself.

"When Chinese businesses are wrongfully treated, China has the right to take measures to safeguard our legitimate and lawful rights and interests," he said.

Canada became entangled in the brewing U.S.-China showdown late last year.

Spavor, a businessman based near the China-North Korea border, and Kovrig, a former Canadian diplomat and geopolitics researcher, were first detained by Chinese state security on Dec. 10, a week after Canadian airport authorities detained senior Huawei executive Meng Wanzhou at the behest of U.S. law enforcement.

The Huawei chief financial officer has since been undergoing extradition proceedings in Canadian court, which is deciding whether to send her to the United States to face bank fraud charges. China has urged Canadian authorities to release Meng and repeatedly issued implicit warnings that Canada would pay a steep human price if she were to be handed over.

Weeks after Meng's arrest, China revisited a 15-year prison sentence for the Canadian Robert L. Schellenberg and raised his sentence to death for trafficking drugs. Last week, a Chinese court scheduled Schellenberg's appeal hearing to begin hours after Meng faced an extradition hearing of her own in Vancouver. After a Canadian court pushed back a decision in Meng's case, the Chinese court also announced it would delay announcing whether Schellenberg would be put to death.

Canada has called on China to grant Schellenberg clemency and release Kovrig and Spavor. Meng's lawyers have argued that her constitutional rights were violated when she was interrogated for three hours at Vancouver's airport and should be released.

Kovrig and Spavor's arrest was first reported by the Globe and Mail newspaper on Thursday.

Since December, Kovrig and Spavor have been kept in cells at undisclosed locations with lights on round-the-clock and without access to lawyers or family members, people familiar with the matter say. The two have been allowed short consular visits once a month, during which they are not allowed to discuss the cases against them with Canadian diplomats.

The men have told Canadian officials that they have not been physically mistreated aside from the extended sleep deprivation.

A Canadian judge this month allowed Meng to move from a $4.2 million mansion into a bigger $10 million mansion - she owns several homes in Canada - due to security reasons.

Meng must wear an ankle monitor as part of her bail terms but she is free to roam Vancouver between the hours of 6 a.m. and 11 p.m. while she awaits her next extradition hearing, scheduled for September.