China urged the United States on Wednesday to stop "unreasonable suppression" of its companies, in response to U.S. proposals to ban Chinese software and hardware in vehicles on its roads due to national security concerns.

"The U.S. move has no factual basis, violates the principles of market economy and fair competition, and is a typical protectionist approach," said a spokesperson for the commerce ministry.

The U.S. Commerce Department on Monday proposed the planned regulation, first reported by Reuters, which would also force American and other major automakers in the future to remove key Chinese software and hardware from vehicles in the U.S. connected to the internet and navigation systems.

Employees work on a car seat assembly line in Shanghai, China, February 24, 2020. REUTERS/Aly Song

The action "seriously affects the normal cooperation between China and the United States in the field of connected vehicles, disrupts the global automotive industry supply chain, and harms the interests of United States consumers," the spokesperson said, according to a statement.

The move would effectively bar Chinese cars and trucks from the U.S. market, with major concerns centred around data collection by connected Chinese vehicles on U.S. drivers and infrastructure and potential foreign manipulation of vehicles.

China and the U.S. have tussled over respective national security concerns. The U.S. has enforced major export bans on semiconductors, and the latest proposal is a significant escalation in U.S. restrictions on Chinese vehicles, software and components.

"The U.S. should immediately revoke its restrictive moves," the spokesperson said.