The United States Justice Department has threatened to cut off China Telecom from serving the US market because of legal and security risks.
A recommendation by the government's top departments, including Defense, State and Homeland Security, said the Federal Communications Commission (FCC) should "revoke and terminate" all authorizations for the Chinese giant's US subsidiary, China Telecom (Americas), to provide international telecommunications services to and from the United States.
"The Executive Branch agencies identified substantial and unacceptable national security and law enforcement risks associated with China Telecom's operations, which render the FCC authorizations inconsistent with the public interest," the Justice Department said in a statement Thursday.
If approved, the move could mean China Telecom's hundreds of millions of phone and internet customers could lose connectivity with or through the United States.
The agencies making the recommendation said China Telecom is vulnerable to "exploitation, influence and control" by Beijing.
The agencies also made the recommendation based on "the nature of China Telecom's US operations," which they said allow Chinese government actors "to engage in malicious cyber activity enabling economic espionage and disruption and misrouting of US communications."
The recommendation has to be decided upon by the FCC.
On Friday, the Chinese foreign ministry said it was "firmly opposed" to the recommendation.
"We urge the US to abide by market principles, stop its wrong practices of using national security as a catchphrase and politicizing commercial matters, as well as stop unfairly suppressing Chinese enterprises," spokesman Zhao Lijian said.
Washington has banned Huawei, the world's largest provider of telecoms equipment and a leader in the new 5G technology, from supplying US government systems and has strongly discouraged use of its equipment by the private sector.