Canada will allow Huawei chief financial officer Meng Wanzhou to be extradited to the US but the court must make a final decision.
Meng was arrested in December by Canadian officials at the request of the US. She is wanted to stand trial on charges that include fraud after allegations she violated sanctions on Iran.
The Chinese embassy in Ottawa has called the arrest a "political persecution" and that it is "utterly dissatisfied" with Canada's decision.
The arrest has soured relations between the US and China amid a trade war that looks to soon be resolved.
In January the US made a formal request for Meng's extradition and filed more than 20 charges against Huawei and the company's executive.
Bank fraud, obstruction of justice and theft of technology are just some of the allegations, all of which have been denied by Huawei and Meng.
The decision to let the extradition case proceed to courts in Canada could not be refused due to the requirements of the US-Canada extradition treaty.
"An extradition hearing is not a trial nor does it render a verdict of guilt or innocence," the Canadian justice department said.
"If a person is ultimately extradited from Canada to face prosecution in another country, the individual will have a trial in that country."
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Meng, whose father, Ren Zhengfei, founded the Chinese tech giant, denies all wrongdoing.
"Our client maintains that she is innocent of any wrongdoing and that the US prosecution and extradition constitutes an abuse of the processes of law," Meng's defence team said.