OTTAWA—Canada’s chief envoy to China said Thursday he misspoke when commenting on the strong legal case Huawei Technologies Co.’s chief financial officer had in fighting a potential extradition request from the U.S.

The statement issued by John McCallum marks an embarrassing setback for Canada’s Liberal government, which finds itself deeply ensnared in the geopolitical battle pitting Washington and Beijing because of its role in arresting Meng Wanzhou in Vancouver, British Columbia, last month at the U.S.’s behest. Since Ms....