Michael Kovrig and Michael Spavor were taken into custody last December, shortly after Canada arrested Huawei chief Meng Wanzhou on behalf of the US.
They have been accused of harming national security, but were not formally arrested until Thursday.
Their official arrest comes a day after the US imposed additional security measures targeting Huawei.
Ms Wanzhou is currently fighting her extradition to the US in Canada’s courts. The US has charged her with fraud linked to alleged violation of sanctions on Iran.
Mr Kovrig is a former Canadian diplomat in Hong Kong who was working for the NGO International Crisis Group last December. Mr Spavor is a businessman with ties to North Korea. China has accused him of supplying state secrets to Kovrig, whom they also accuse of spying.
Their arrests have widely been viewed as a tit-for-tat tactic to put the pressure on Canada to release Ms Wanzhou.
Prime Minister Justin Trudeau called their arrests “unacceptable”.
“We will continue to defend these Canadians. We will continue to back these Canadians,” he told media on Thursday.
The two men have had regular access to both Canadian consular officials and their lawyers while in detention. According to the Canadian government, Chinese law allows for people to be held for 13-and-a-half months after an official arrest before charges are filed.