The Wall Street Journal reported that the Chinese ministry of commerce was thinking of imposing export controls on Nokia and Ericsson to prevent the two companies from sending product made in China to other countries.
The European Union has not formally banned the use of Huawei equipment as the UK did last week. It has drawn up a set of guidelines for member nations to adopt if they wish when choosing their 5G suppliers. A report on how the guidelines have ben followed is expected soon.
Nokia has about 16,000 employees, many in research and development, in its Greater China market, which includes Hong Kong and Taiwan.
The Swedish firm has small contracts to supply 5G gear to China's state-run wireless carriers while Huawei and ZTE have much bigger deals with these carriers.
The WSJ report said Nokia had become aware of the likely restrictions ahead and was reviewing its supply chain in order to draft a contingency plan to manufacture elsewhere.
Last Thursday, China's commerce ministry said it would take whatever measures it deemed necessary to protect the legitimate rights of Chinese firms.
The Greater China chairman of advisory and advocacy consulting firm APCO Worldwide, Jim McGregor, told the WSJ: "This kind of action could backfire by frightening some foreign tech companies into moving manufacturing out of China.
“Companies are already very nervous about getting caught in geopolitical battles and are reassessing their manufacturing sites and supply chains to protect their business continuity.”