The US FCC said on Monday that the proposed rules were part of an initiative to "safeguard the nation's communications networks".
China on Tuesday blasted as "economic bullying" a US proposal to block telecom carriers buying from Chinese tech companies Huawei and ZTE.
The US Federal Communications Commission (FCC) said on Monday that the proposed rules -- which also require carriers to remove any existing Huawei and ZTE equipment -- were part of an initiative to "safeguard the nation's communications networks".
The two Chinese firms have been accused of posing a national security threat because of their close ties to the Beijing government, claims both have denied.
Chinese foreign ministry spokesman Geng Shuang slammed the US proposal as an attempt to "oppress certain Chinese businesses with groundless accusations".
Geng said at a regular news briefing Tuesday that the move would ultimately hurt US businesses.
"The United States' economic bullying goes against the market principles which the US has always trumpeted," he said.
FCC chairman Ajit Pai said the new plan would bar communications companies from using any support they receive from the government's Universal Service Fund to purchase equipment or services from companies "posing a national security threat", including Huawei and ZTE.
The proposal -- to be voted on November 19 -- marks the latest effort by Washington to penalise Huawei, a major telecom infrastructure provider and smartphone maker that is already on a blacklist preventing it from access to certain US tech products and services.
"When it comes to 5G and America's security, we can't afford to take a risk and hope for the best," Pai said in a statement.
"We need to make sure our networks won't harm our national security, threaten our economic security, or undermine our values."
Pai said that as the US upgrades to fifth-generation wireless networks, "we cannot ignore the risk that the Chinese government will seek to exploit network vulnerabilities in order to engage in espionage, insert malware and viruses, and otherwise compromise our critical communications networks".
Huawei says Washington has provided no proof of any security risks posed by the company.
The rules would do little to improve information security and blocking access to Huawei gear would only harm US telecom networks, the company said in a statement.
"In 30 years of business, Huawei has never had a major security-related incident in the 170 countries where we operate," the statement said.
"Banning specific vendors based on country origin will do nothing to protect America's telecommunications networks."
In May, Washington said it would blacklist Huawei from the US market and from buying crucial US components, though it has twice extended the company 90-day reprieves, the latest coming in August.
The United States has expressed concern that Huawei equipment could contain security loopholes that allow China to spy on global communications traffic, and has pressured US allies to block the use of Huawei equipment.
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