A Chinese government news site has released a statement saying Canadian man Michael Spavor is being detained and investigated in China on suspicion of harming China's national security.
The statement comes after Mr Spavor went missing earlier this week, in what appeared to be retaliation for Canada's arrest of a top executive of Chinese telecommunications giant Huawei.
The State Security Bureau in the city of Dandong in north-east China has been investigating Mr Spavor since December 10, an official news site of the Liaoning province government said.
It did not give any further details.
Mr Spavor is an entrepreneur and is one of the only Westerners to have ever met North Korean leader Kim Jong-un.
His disappearance followed China's detention of a former Canadian diplomat, Michael Kovrig, in Beijing earlier this week.
Canadian authorities said Mr Spavor reached out to them earlier in the week.
"We have been unable to make contact [with Mr Spavor] since he let us know he was being questioned by Chinese authorities," Canadian foreign affairs spokesman Guillaume Berube said.
Mr Spavor is a fluent Korean speaker with long-standing ties to North Korea through his company, Paektu Cultural Exchange.
He was instrumental in bringing NBA player Dennis Rodman to Pyongyang in 2013 and has organised a number of tours and joint cultural projects with the North since then.
Acquaintances said he was due in Seoul on Monday but never showed up.
'A country of the rule of law'
At the root of the dispute is Canada's recent arrest of Meng Wanzhou, Huawei's chief financial officer, for possible extradition to the United States.
A Canadian court released Ms Meng on bail on Tuesday, confining her to Vancouver and its suburbs while she awaits a decision over her extradition.
The US has accused Huawei of using a Hong Kong shell company to do business with Iran — in violation of US sanctions.
The United States and China took pains this week to emphasise that their trade talks are entirely separate from the US case against the Huawei executive.
But with a few words, US President Donald Trump obliterated the distinction, saying he would wade into the case if it would help produce a trade agreement with China.
"If I think it's good for what will be certainly the largest trade deal ever made — which is a very important thing, what's good for national security — I would certainly intervene if I thought it was necessary," Mr Trump told Reuters.
The comment suggested Ms Meng could be a political pawn in negotiations and makes things more awkward for Canada, which arrested her on America's behalf during a December 1 layover at Vancouver airport.
Canadian Prime Minister Justin Trudeau bristled at Mr Trump's assertion, saying: "Regardless of what goes on in other countries, Canada is, and will always remain, a country of the rule of law."
Ms Freeland said it was "quite obvious" any foreign country requesting extradition should ensure "the process is not politicised".
Canada has also asked China for extra security at its embassy because of protests and anti-Canadian sentiment and has advised foreign service staff to take precautions, a senior Canadian official told reporters.
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