China says Canadian stole secrets; Huawei to sue U.S.

China's government and its leading smartphone maker, Huawei Technologies Ltd, stepped up pressure on Monday on the U.S. and Canadian governments in a dispute over trade and telecoms technology that has ensnared Huawei's CFO, who faces U.S. criminal charges.

China on Monday accused detained Canadian citizen Michael Kovrig of stealing state secrets passed on to him from another detained Canadian, businessman Michael Spavor, in a move likely to increase tension between Ottawa and Beijing.

The telecom gear maker is also preparing a lawsuit against the U.S. government over a law that restricts its market access.

It was the latest escalation of an unprecedented crisis for Huawei, the world's largest telecommunications equipment maker and No. 2 manufacturer of smartphones, as Washington calls on governments around the world to stop using its gear, particularly in the next generation of telecommunication networks, known as 5G.

Spavor, a business consultant with deep ties to Pyongyang, had been trying to drum up international interest in investing in North Korean economic projects. He and Kovrig, a former diplomat, were picked up in December, shortly after Canada arrested Huawei Chief Financial Officer Meng Wanzhou, who faces extradition to the United States.

The Communist Party's Central Political and Legal Affairs Commission said Kovrig had often entered China using an ordinary passport and business visas, "stealing and spying on sensitive Chinese information and intelligence via a contact in China."

“We are obviously very concerned with this position that China has taken," Canadian Prime Minister Justin Trudeau said about the accusations on Monday. "We’ve been engaging and standing up for the two Canadians who have been arbitrarily detained by China from the very beginning."

Lawyers for Meng are suing the Canadian government, its border agency and federal police, alleging their client was detained, searched and interrogated for three hours in violation of her constitutional rights.

Canada arrested Meng in Vancouver on Dec. 1 at the request of the United States, which has charged her with bank and wire fraud to violate American sanctions against Iran by doing business through a subsidiary it tried to hide.