Swedish public broadcaster SVT described the unnamed 54-year-old suspect as “one of the most wanted people in China”, adding that he had been in custody in Stockholm since June 25.
SVT said the man, who was the head of a state-owned company trading cereal and rice, fled China in 2011 when the Chinese police discovered that he allegedly transferred large sums of money from the company to banks abroad.
Karin Rosander, press officer at the Swedish Prosecution Authority, told AFP that Beijing “had requested his extradition” to China to prosecute him there.
Rosander, who declined to reveal the man's identity or when the arrest took place, said Swedish authorities were examining “whether there are legitimate reasons to extradite him to China”.
He is accused of having embezzled nearly 10 million euros (more than $11 million) from the company, according to SVT.
China has issued an international arrest warrant for him and his case has been widely reported in global media, SVT said.
Rosander said Sweden did not extradite suspects easily, especially if their life might be in danger or if the country involved had the death penalty.
“This case is about proving what kind of evidence there is against him,” she said, adding the accusations were being handled as a corruption case.
The man travelled to the US with his ex-wife after fleeing China in 2011 and they were arrested there on suspicion of money laundering, according to SVT.
The suspect, who escaped the US charges, claims to have been living in Sweden since 2014.
He moved to Sweden with a new identity and passport and later re-married, which legally allowed him to remain in the Nordic nation.