Chinese officials said today that Sweden's H&M and other foreign companies should not to make rash moves or step into politics after the companies raised concerns about forced labour in Xinjiang.
This has sparked furious online backlash and boycotts.
H&M, Burberry, Nike and Adidas and other Western brands have been hit by consumer boycotts in China since last week over comments about their sourcing of cotton in Xinjiang.
The growing rift comes as the US and other Western governments increase pressure on China over suspected human-rights abuses in the western region.
"I don't think a company should politicise its economic behaviour," said Xu Guixiang, a Xinjiang government spokesman at a news conference this morning.
"Can H&M continue to make money in the Chinese market? Not any more."
"To rush into this decision and get involved in the sanctions is not reasonable. It's like lifting a stone to drop it on one's own feet," he said.
Chinese social media users last week began circulating a 2020 statement by H&M announcing it would no longer source cotton from Xinjiang.
H&M said at the time the decision was due to difficulties conducting credible due diligence in the region and after media and human rights' groups reported the use of forced labour in Xinjiang - a charge that Beijing has repeatedly denied.
Elijan Anayat, another Xinjiang government spokesman, said during the briefing that Chinese people do not want the products of companies such as H&M and Nike that have boycotted Xinjiang's cotton.
He said he welcomed companies to take trips to the region's cotton fields to see for themselves what is happening.
Washington on Friday condemned what it called a "state-led" social media campaign in China against US and other international companies for committing not to use cotton from Xinjiang.
The wave of consumer boycotts in China has coincided with a coordinated set of sanctions imposed by Britain, Canada, the European Union and the US last week over what they say are human rights abuses taking place in Xinjiang.
The US government has publicly accused Beijing of genocide against the Uighur Muslim ethnic minorities in the region.
Xu repeatedly rejected accusations of genocide and human rights abuses in the region and accused the Western powers of engaging in political manipulation to destabilise China with the sanctions.
"They have lost their minds and their conscience, they are enthusiastic about political manipulation and the abuse of sanctions, to a level that is hysterical," said Xu.
"Their real purpose by fabricating the issue of genocide is to disrupt security and stability in China," Anayat said.
The US in January announced an import ban on all cotton and tomato products from the area due to allegations of forced labour from detained Uighur Muslims.
Western governments and rights groups have previously accused authorities in the far-western region of detaining and torturing Uighurs in camps, where some former inmates have said they were subject to ideological indoctrination.
China has repeatedly denied all such charges and say the camps are for vocational training and combating religious extremism.