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* FedEx returned package which sender says contained Huawei phone
* U.S. delivery firm blames "operational error"
* U.S. restricts business with Huawei due to security concerns
* FedEx misrouted Huawei packages last month, China investigating
* Chinese media speculate FedEx's addition to 'unreliable list' (Adds comments from Huawei, Chinese foreign ministry; media and social media reaction; context)
June 24 (Reuters) - FedEx Corp has apologized for returning a package which the sender said contained a Huawei smartphone, blaming an "operational error" as it works to comply with U.S. restrictions on business with China's Huawei Technologies Co Ltd.
The error came less than a month after FedEx apologized for misdirecting packages sent between offices of Huawei. The telecom equipment maker subsequently said it would review its relationship with the U.S. delivery firm, while Chinese state media said authorities are investigating the matter.
Weeks earlier, Huawei was placed on the United State's so-called Entity List, meaning American companies must apply for special permission to conduct business with related firms. The U.S. government deems Huawei a security risk due to Chinese law requiring domestic companies to comply with intelligence work.
Huawei had relied on U.S.-connected companies to supply components and software for its networking gear and smartphones.
On Friday, PC Magazine said FedEx had returned a Huawei phone that the American publication had sent from Britain to the United States.
In response to a Reuters inquiry, FedEx on Sunday said it "can accept and transport all Huawei products except for any shipments to listed Huawei entities on the U.S. Entity List."
A FedEx spokeswoman confirmed the package in question was bound for the United States but declined to disclose its contents.
Huawei on Sunday tweeted it was not within FedEx's right to prevent the delivery and said the courier had a "vendetta."
On Monday, China's foreign ministry said FedEx should offer a proper explanation. The Beijing News, municipal government-run newspaper, in an editorial said U.S. firms should be "rational" and not over-react or misinterpret the U.S. Entity List.
The list expanded on Friday with the addition of several Chinese companies and a government-owned institute involved in supercomputing with military applications.
The incident sparked renewed criticism of FedEx on Chinese social media, with the topic "FedEx apologizes again" trending on Weibo, China's Twitter-like microblog platform.
State-run newspaper Global Times on Sunday tweeted that FedEx is likely to be added to the Chinese government's upcoming Unreliable Entities List of foreign firms, groups and individuals that harm the interests of Chinese companies.
Neither China's commerce ministry nor FedEx responded to Reuters' requests for comment on the likelihood of FedEx being added to the list. State news agency Xinhua previously said authorities' investigation into FedEx misrouting Huawei packages should not be regarded as retaliation.
FedEx's operational error comes against a backdrop of increasing tension between the world's two biggest economies. The United States and China have been engaged in a trade fight for nearly a year on issues such as tariffs, subsidies, technology, regulations and cyber security.
A telephone call between U.S. President Donald Trump and Chinese President Xi JinPing last week, as well as confirmation the two will meet in Japan on the sidelines of a Group of 20 summit, have rekindled hopes of a detente.
(Reporting by Kanishka Singh in Bengaluru, Caroline Stauffer in Chicago and Sijia Jiang in Hong Kong; Additional reporting by Huizhong Wu in Beijing; Editing by Marguerita Choy and Christopher Cushing)