Canadian Prime Minister Justin Trudeau says his government had no involvement in the arrest of a top executive from Chinese telecoms giant Huawei.
Meng Wanzhou was detained at Vancouver airport on Saturday on an extradition request from the US.
China has demanded her release, calling the arrest a human rights violation.
The charges have not been made public. Huawei said it was “not aware of any wrongdoing by Ms Meng”.
She faces a bail hearing on Friday.
Earlier reports suggested the arrest could be related to a US investigation into a possible violation of sanctions against Iran.
US National Security Adviser John Bolton declined to comment on this when questioned by journalists.
Instead he said that – generally speaking – he had “enormous concerns” over Chinese firms’ business practices and their possible operations as “arms” of the government.
European shares hit a two-year low and indexes across Asia dropped sharply following the arrest, which analysts said revived worries over the US-China trade war.
However, the three main US indexes regained some ground by the end of the day, with the Nasdaq closing higher.
Who is Meng Wanzhou?
Ms Meng is the company’s chief financial officer and the founder’s daughter.
Huawei is one of the largest telecommunications equipment and services providers in the world, recently passing Apple to become the second-biggest smartphone maker after Samsung.
The details of the charges against her remain unknown after she sought a publication ban, which was granted by the Canadian judge.
She was arrested while changing flights on Saturday. It was the same day that US President Donald Trump and Chinese President Xi Jinping met in Argentina for the G20 summit, where they agreed a 90-truce in their trade war.
What do we know about the arrest?
Her arrest was not revealed by the Canadian authorities until Wednesday, the day when she had her first court appearance.
Speaking to reporters in Montreal, Mr Trudeau said his government was told about the arrest a few days beforehand, but it did not play a role.
“I can assure everyone that we are a country [with] an independent judiciary,” he said.
US National Security Adviser John Bolton has also said he knew about the arrest in advance.
He added that the US has had “enormous concerns for years about the […] practice of Chinese firms to use stolen American intellectual property, to engage in forced technology transfers, and to be used as arms of the Chinese government’s objectives in terms of information technology in particular”.
“So not respecting this particular arrest, but Huawei is one company we’ve been concerned about,” he added.
US lawmakers have repeatedly accused the company of being a threat to US national security, arguing that its technology could be used for spying by the Chinese government.
The US, Australia and New Zealand have recently blocked the use of Huawei’s equipment in infrastructure for new faster 5G mobile networks, citing security concerns.
The gloves are off
By Karishma Vaswani, BBC Asia Business Correspondent
It is hard to overstate the symbolism and significance of this event. Huawei is the crown jewel of Chinese tech and Ms Meng is effectively its princess.
Even though it’s still not clear what the charges against her are, this is not simply a case about the arrest of one woman, or just one company.
This arrest could materially damage the relationship between the US and China at possibly one of the most sensitive times between the two countries in their long and torrid history.
The gloves are off. Things have taken a dramatic turn for the worse.
What does China say?
A Chinese foreign ministry spokesperson told reporters: “The detention without giving any reason violates a person’s human rights.”
“We have made solemn representations to Canada and the US, demanding that both parties immediately clarify the reasons for the detention, and immediately release the detainee to protect the person’s legal rights.”
In a statement, Huawei said it had complied with “all applicable laws and regulations where it operates, including applicable export control and sanction laws and regulations of the UN, US and EU.”