China's ambassador to Canada is rejecting claims by the new Conservative government that Chinese spies are stealing Canada's industrial and high-tech secrets.

In an exclusive interview with CTV News on Thursday, Ambassador Lu Shumin declared: "There is no Chinese espionage in Canada."

"We express our grave concerns about this and, as Chinese ambassador, I can see the so-called Chinese espionage against Canada does not hold water."

The ambassador echoed a statement made earlier in the day by the Chinese Foreign Ministry, which said the spy claims were baseless and irresponsible.

Chinese Foreign Ministry spokesman Qin Gang said China has not been engaging "in any so-called economic espionage activities in Canada."

"China expresses great concern over this. We hope the Canadian government can make a clear distinction between what's true and false and do more to help the healthy development of the China-Canada strategic partnership," Qin said at a regular briefing.

The accusation of espionage was first raised in an interview last week on CTV's Question Period, in which Foreign Affairs Minister Peter MacKay said his government was "very concerned about economic espionage."

While in opposition, the Conservatives challenged the Liberal-led government to act on reports of Chinese espionage.

"It is something we want to signal that we want to address, and to continue to raise with the Chinese at the appropriate time," MacKay said.

Prime Minister Stephen Harper backed MacKay, saying the minister's comments were well-founded, adding that he did not believe trade between the two countries has been threatened.

"We have some concerns with certain activities of the Chinese government in this country and we do intend to raise them at the appropriate time," Harper told reporters in Montreal.

In response, the Chinese envoy issued a veiled warning to the prime minister, hinting that a recent deal signed by the former Liberal government to improve economic trade could be in jeopardy.

"These kinds of accusations do not help the relationship and are not conducive to the development of this strategic partnership between the two countries," Lu told CTV's Ottawa bureau chief Robert Fife.

CSIS intelligence

Intelligence files reportedly suggest that an estimated 1,000 Chinese agents and informants operate in Canada. Many of them are visiting students, scientists and business people, told to steal cutting-edge technology.

One example MacKay pointed out was China's Redberry -- an imitation of the BlackBerry portable e-mail device -- created by Waterloo, Ont.-based Research in Motion Ltd.

According to a 2003-2004 CSIS report to Parliament, foreign spies are trying to uncover "Canada's scientific and technological developments, critical economic and information infrastructure, military and other classified information, putting at risk Canada's national security."

However, CSIS does not specifically mention China in the report.

Former Canadian Security Intelligence Service agent Michel Juneau-Katsuya has said the former Liberal government knew of the espionage, but were too afraid to act and anger Canada's second-largest trading partner.

"We didn't want to piss off or annoy the Chinese," said Juneau-Katsuya, who headed the agency's Asian desk. "(They're) too much of an important market."

However, he argued that industrial espionage affects Canada's employment levels.

"For every $100 million that we lose in intellectual property or business, we lose about 1,000 jobs in Canada," he said.