Huawei, a leader in developing 5G networks, has been at the centre of an escalating trade war between the U.S. and China, and was blacklisted by the United States government in May after following repeated accusations of espionage.
Similarly, BBC reports that China's ambassador to the UK Liu Xiaoming has warned the government of grave outcome should Huawei be blocked from taking part in Britain's 5G network.
The United States has severely limited Huawei's access to the U.S. market and US-made technology over the past two years amid fears that its equipment, especially that for the coming next-generation 5G wireless markets, could offer Chinese intelligence services a back door to USA communications.
He said: 'I don't think it would be realistic not to recognise that, when you have a hugely interconnected sector, when you have a situation where even Huawei equipment has US componentry and IP in it, you can't disregard what the USA administration decide to do.
"They are all factors to be considered and we are considering them".
Chinese ambassador Liu Xiaoming said blocking Huawei from Britain's 5G network would send a "very bad signal" to other Chinese companies.
The Prime Minister apparently signed off on allowing Huawei to help build "non-core" parts of the network.
There had been suggestions that allowing the firm to help build the network could prompt Washington to rethink its existing intelligence sharing relationship with the UK.
A report from the Henry Jackson Society, a London-based neoconservative think tank, said that to allow the company access to Britain's next-generation mobile-phone network would be a detriment to security and alleged that Huawei is part of the "Chinese party-state apparatus".
Sources claim that a final decision by senior members of the British cabinet was due to take place in recent weeks, but May's resignation as prime minister has impeded the process. She is expected to be out of office by the end of July.