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"Chinese Spyware" is probably a little hyperbolic, but it's not a claim without merit either.
Basically, the issue is that companies that operate in China are beholden to an authoritarian government that has the power to get whatever data they want from the company. Add to that, for the average person, their smartphone contains a ton of data about them and is often brought into trusted networks when you turn Wifi on, collecting even more info.
In the US they were banned largely because the company has very close ties to a foreign government and regulating that communication is far harder once the devices are widely available.
Right now, that data is mostly used to build a profile about you for the purposes of advertising because that's what's profitable, but that data exists and can be used for other things if someone with access wants to.