The immediate threat is to keep Ericsson out of the next phase of China's 5G build out, but it won't end there.
The Global Times, an instrument of the Chinese state, said the Swedish government has one last chance to reverse the ban on operators using Huawei equipment in telecoms infrastructure.
The decision was taken on the grounds of national security by the Swedish Post and Telecom Authority (PTS), but has been challenged in the Swedish courts by Huawei with the final decision is expected in the next few weeks.
World's biggest market
In the meantime, the Chinese government is threatening possible retaliatory action against Swedish telecoms equipment firm Ericsson, preventing its involvement in the next phase of China’s 5G build out.
China is the biggest 5G market in the world, with its operators collectively deploying almost three-quarters of a million base stations last year.
Non-Chinese vendors are only ever been allowed a small share of the Chinese telecoms market whereas Huawei had unfettered access to European markets – and had the lion's share in many until security concerns reached the top of the agenda, largely propelled by the Trump Administration.
Even a small share of such a huge market is lucrative hence Ericsson’s CEO, Börje Ekholm, has criticised the Swedish stance and in turn has been criticised for blatant self-interest.
The governments of Australia, the UK and the US have all banned the use of Chinese vendors equipment in infrastructure on the grounds of national security.
Threats from the start
From the start China threatened the Swedish state with retaliatory measures for its action against Huawei, so they are not likely to be confined to Ericsson, although further damage could also be inflicted on Ericsson by denying it access to the Chinese supply chain as well not being able to sell its products in China.
The question is can Sweden publicly bow down to such direct public bullying, and what the implications are for other European states if it does?