New Zealand’s international spy agency has banned mobile company Spark from using Huawei equipment in its planned 5G upgrade, saying it posed a “significant network security risk”.

The action follows a similar ban in Australia, where the Chinese telecommunications giant was blocked in August from rolling out Australia’s 5G network due to security concerns.

Spark says it is disappointed with the decision by New Zealand’s Government Communications Security Bureau.

But the company is confident it can still launch its 5G network by July 2020.

Huawei suffered a setback in the US market in 2012 when a congressional report said it was a security risk and warned phone companies not to buy its equipment.

In New Zealand, Huawei has previously helped build mobile networks.

In March, Spark and Huawei showcased a 5G test site across the street from the Parliament in a publicity move that was attended by then-broadcasting minister Clare Curran.

The latest development could have diplomatic and economic implications for New Zealand, which relies on China as its largest trading partner.

But New Zealand is also part of the “Five Eyes” security alliance that includes the US, Britain, Canada and Australia.

New Zealand was the first developed nation to sign a free trade deal with China in 2008, and China buys billions of dollars of New Zealand’s dairy exports each year, which are often used in making infant formula.

New Zealand’s previous conservative government had a close relationship with China.

But over the past year under Labour Prime Minister Jacinda Ardern, New Zealand has pulled back somewhat, embracing a warmer relationship with Japan and putting resources into the Pacific, in part to counter China’s growing influence.

5G in Australia as soon as 2020

After Huawei was prohibited from rolling out 5G infrastructure in Australia the company denied it posed a risk to national security and said it had “securely delivered wireless technology in Australia for close to 15 years”.

5G is the next generation of mobile technology and is expected to deliver faster data speeds and connections.

It is predicted to offer up to 50 times the bandwidth available on 4G networks with which users can download the equivalent of three television episodes in a second.

It will also allow more people to use the network before it clogs up and is expected to usher in the “network of things” by providing mobile connections for driverless cars and smart appliances.

People in Australia could be able to use the high-speed mobile phone network from 2020.

Ahead of its launch, experts want further studies into the possible health effects of 5G after research showed 5G technology could penetrate skin to a depth of 8 millimetres.

Huawei has argued that with or without them being involved in Australia’s 5G rollout, the technology will be made in China and banning it would “decimate” the industry, slowing network upgrades and lowering competition.

–ABC/AP