From what I remember it was the NSA that hacked Huawei, the problem they had was that there were routers on the market that they could not backdoor as easily as products from Cisco and other Western vendors that were amenable to their requirements.

It may not be xenophobia, it might just be plain paranoia, either way there is some public diplomacy going on that is carefully crafted to get people to fear the 'enemy' hacking everything. Why attribute everything to malice? Ultimately there is good money to be made in selling routers particularly if you can get a municipality to spend proper money on providing connectivity for a city sized area. Huawei might not be a front for the Chinese army, they could be wanting to make profit from a legitimate product. They know full too well that any backdoor specials could compromise their entire business model to lose all of their contracts to put themselves out of business. Why would they run that risk?

Cui bono applies, by making accusations NSA/GCHQ can get them out of the market so that the only option for customers is to buy equipment that is hackable by them.