WATFORD, England (Reuters) - British telecom companies should show “all due caution” before using China’s Huawei equipment in their 5G networks because the government cannot ignore the warnings from the United States, its digital minister said.

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Britain has found itself caught up in the diplomatic row between Washington and Beijing after the Trump administration told allies not to use Huawei’s 5G equipment for fear it could allow China to spy on sensitive communications and data.

Britain’s National Security Council, chaired by Prime Minister Theresa May, had agreed in April to allow Huawei restricted access to non-core parts of the 5G network, but that decision has been put on hold following the U.S. intervention.

However, Britain’s biggest mobile phone company EE launched 5G services in six cities in May, using its existing network which still contains some Huawei equipment in its core.

“Because those decisions have been made by the U.S. relatively recently that means we have to take a step back and think carefully about them before we make our final decision,” Digital Minister Jeremy Wright told reporters.

“What that means for telecoms companies is they’ve got to make their decisions with all due caution. If there is a complete ban on the inclusion of Huawei equipment in 5G networks then of course that means what it says.”

5G, which will offer much faster data speeds and become the foundation stone of many industries and networks, is seen as one of the biggest innovations since the birth of the internet itself a generation ago.

Companies in China, the United States and Europe, including Huawei competitors Ericsson and Nokia, are all racing to dominate the space.

FINE LINE

Meanwhile European nations are treading a fine line in the dispute between the world’s two most powerful countries, under U.S. pressure to take a hard line on Huawei but also anxious not to sour trading and diplomatic relations with China.

The U.S. Secretary of State Mike Pompeo and U.S. National Security Adviser John Bolton have all visited Britain in recent weeks and talked up the threat of Huawei.

Huawei, founded in 1987 by a former engineer in China’s People’s Liberation Army, denies it spies for Beijing, says it complies with the law and that the United States is trying to smear it because Western companies are falling behind.

China’s ambassador to London warned the British government on Thursday that if Huawei was blocked from developing 5G networks then it will hurt Chinese trade and damage the overall investment relationship with the United Kingdom.

“It will send a very bad message not only to Huawei but also to Chinese businesses,” Ambassador Liu Xiaoming told the BBC.

Britain’s telecoms companies, including the world’s second biggest operator Vodafone, have also warned that a complete ban on Huawei would both delay, and make more expensive, the roll-out of 5G networks.

Wright added that Britain had put certain protections in place for using Huawei before in earlier networks.