"According to information which some of the [Czech] government members have, China is preparing some response measures, which may affect several areas, after this campaign against the Huawei company," Zeman said as aired by the TVBarrandov broadcaster.
"If China decides to limit its support for these investment activities, it will negatively affect not only this company [Skoda Auto] but the whole car industry and the Czech economy as a whole," Zeman pointed out.
The president also suggested that an agreement between Huawei and PPF on the creation of a 5G network in the Czech Republic might also be damaged by the potential retaliatory measures by Beijing.
Zeman’s remarks followed a statement of Dusan Navratil, the director of NCISA, who warned mobile networks against cooperation with Huawei and ZTE, citing their alleged cooperation with Chinese security services. Moreover, the Czech Security Intelligence Service (BIS) has suggested that the activities of Chinese security services, particularly in the area of commercial espionage, have boosted in the country.
READ MORE: Chinese Envoy Accuses Canada of ‘White Supremacy' in Huawei Arrest Case
On Monday, Czech Prime Minister Andrej Babis said the Czech government had instructed the authorities to analyze the risks related to the use of computer software produced by Huawei and ZTE. Babis said that the checks would affect 160 leading government agencies, as well as private and state-run companies.
Huawei has recently faced allegations that it had been linked to the Chinese government. Last year, Australia, Japan, New Zealand and the United States have banned the Chinese telecommunications giant from participating in government contracts.