Dra­matic course as food was served

The Weekend Australian - - THE NATION - GLENDA KORPORAAL CHINA COR­RE­SPON­DENT

As US Pres­i­dent Don­ald Trump and Chi­nese coun­ter­part Xi Jin­ping were sit­ting down to a din­ner of Ar­gen­tinian steak and wine at a Buenos Aires ho­tel on Satur­day, Meng Wanzhou, the 41-year-old daugh­ter of the founder of telecom­mu­ni­ca­tions gi­ant Huawei, was be­ing de­tained at Van­cou­ver air­port.

Meng, Huawei’s chief fi­nan­cial of­fi­cer, was ar­rested in tran­sit at the re­quest of the US Jus­tice De­part­ment on sus­pi­cion of vi­o­lat­ing US sanc­tions against Iran.

At least one per­son at the Buenos Aires din­ner was aware of what was about to go down — Trump na­tional se­cu­rity ad­viser John Bolton yes­ter­day con­firmed he had been told in ad­vance.

Meng had been seen as heir ap­par­ent at the Shen­zhen telecom­mu­ni­ca­tions com­pany founded by her fa­ther, Ren Zhengfei.

An ac­tive ex­ec­u­tive in the com­pany for the 20 years, Meng is also deputy chair­man of Huawei, which has been a sup­plier for more than a decade to Op­tus and Voda­fone in Aus­tralia and British telecom­mu­ni­ca­tions gi­ant BT.

At the din­ner, Xi was deep in dis­cus­sions about a pos­si­ble trade deal to hold off Trump’s threat­ened tar­iff in­creases on $US200 bil­lion worth of Chi­nese im­ports that had been set to go live in Jan­uary.

While the truce has been por­trayed in China as a break­through, it came only as a re­sult of an agree­ment by Xi to sig­nif­i­cantly step up Chi­nese pur­chases of US goods and to go some way to­wards an­swer­ing Trump’s com­plaints about Chi­nese theft of in­tel­lec­tual prop­erty and hack­ing.

Had Xi known of the ar­rest of the daugh­ter of one of China’s most prom­i­nent busi­ness­men, there would have been a very dif­fer­ent at­mos­phere in the room.

The rare ar­rest of a se­nior Chi­nese busi­ness leader in the West for al­leged cor­po­rate mis­be­haviour is likely to in­ten­sify a tech­no­log­i­cal Cold War that has seen Western na­tions shun­ning equip- ment — of­ten cheaper and more ad­vanced — be­cause of se­cu­rity con­cerns.

Re­gard­less of the suc­cess of the charges laid against Meng when she is ex­tra­dited to the US, her shock ar­rest will be a ma­jor set­back for Huawei, the com­pany founded in 1987 when her fa­ther was a se­nior en­gi­neer with the Peo­ple’s Lib­er­a­tion Army.

The head of Bri­tain’s MI6, Alex Younger, said this week the British gov­ern­ment should ques­tion Huawei’s in­volve­ment in the roll­out of 5G ser­vices given moves by the UK’s al­lies to ban the com­pany.

In Au­gust, the Trump ad­min­is­tra­tion banned Huawei and fel­low Chi­nese tech gi­ant ZTE from sup­ply­ing equip­ment to the US gov­ern­ment.

Bri­tain’s BT, which has been a long-time user of Huawei equip­ment, said it would not be us­ing the Chi­nese com­pany’s tech­nol­ogy in its 5G net­work and would be re­mov­ing its equip­ment from much of its 4G net­work.

And in Tokyo yes­ter­day there were re­ports the Ja­panese gov­ern­ment was also con­sid­er­ing new guide­lines to ban Chi­nese equip­ment from its 5G net­work.

The old­est child of Ren Zhengfei, Meng joined the fam­ily com­pany more than 20 years ago. Her younger half-sis­ter is study­ing at Har­vard Uni­ver­sity.

Meng worked at var­i­ous po­si­tions in the com­pany be­fore do­ing a mas­ters de­gree at Huazhong Uni­ver­sity of Science and Tech­nol­ogy in Wuhan, af­ter which she joined the com­pany’s fi­nance de­part­ment.

Her ar­rest was fol­lowed by a dam­ag­ing story leaked to the South China Morn­ing Post that re­ported Meng had told em­ploy­ees dur­ing an in­ter­nal brief­ing in Oc­to­ber, with her fa­ther present, that there were some sce­nar­ios in which a com­pany had to weigh up the costs and ac­cept the risk of not ad­her­ing to cor­po­rate rules.

In a leaked memo, she was quoted as say­ing there were dif­fer­ent types of ex­ter­nal reg­u­la­tory com­pli­ance fac­ing a com­pany, di­vid­ing them into “red” and “yel­low” lines.

The leaked doc­u­ment said both Meng and her fa­ther told the staff ques­tion-and-an­swer ses­sion that the com­pany wanted to limit the cost of com­pli­ance and did not want to ex­ceed what was legally re­quired in each ju­ris­dic­tion.

The world­wide stock­mar­ket eu­pho­ria that greeted the news of the Trump-Xi deal on Mon­day was al­ready cool­ing when the news of the ar­rest broke on Thurs­day morn­ing, Aus­tralian time.

A week af­ter the din­ner in Ar­gentina, Meng’s ar­rest has brought a new at­mos­phere of sus­pi­cion and mis­trust in China about the mo­tives of the Trump ad­min­is­tra­tion and whether it is se­ri­ous about strik­ing a deal on trade.

Mean­while, Meng re­mains in a Cana­dian jail.

She was hop­ing to ap­ply for bail overnight while Cana­dian au­thor­i­ties worked on her ex­tra­di­tion.

US-based China watcher Bill Bishop yes­ter­day warned that US telecom­mu­ni­ca­tions ex­ec­u­tives should post­pone any trips to China and sug­gested that those cur­rently in the coun­try should con­sider get­ting out.

Writ­ing in his widely read news­let­ter Sinocism, he said there were ru­mours in the US that China could re­tal­i­ate by ar­rest­ing a US ex­ec­u­tive vis­it­ing China.

While he re­jected the idea, he sug­gested that US ex­ec­u­tives should be cau­tious about vis­it­ing in the cur­rent in­creas­ingly tense at­mos­phere.

In China, ru­mours have been sweep­ing so­cial me­dia that her ar­rest may have been linked with the death on Satur­day of 55-yearold Chi­nese-Amer­i­can sci­en­tist and ven­ture cap­i­tal­ist Zhang Shoucheng, who had been suf­fer­ing from de­pres­sion.

Sug­ges­tions were that Zhang, a Stan­ford pro­fes­sor, may have known about US Jus­tice De­part­ment in­ves­ti­ga­tions into Huawei and other com­pa­nies that have been un­der way for some time, although his fam­ily is­sued a state­ment yes­ter­day re­ject­ing the spec­u­la­tion.

Meng’s ar­rest has capped off a night­mare week for Huawei, which is a lead­ing face of China’s re­cent global tech­no­log­i­cal suc­cess.

In ar­rest­ing Meng, the US has struck at the heart of China’s lead­ing-edge tech­nol­ogy — tech­nol­ogy that Trump al­leges has been partly built on know-how taken from US com­pa­nies.

An ed­i­to­rial in The China Daily yes­ter­day ar­gued that “the US is try­ing to do what­ever it can to con­tain Huawei’s ex­pan­sion in the world, sim­ply be­cause the com­pany is the point man for China’s com­pet­i­tive tech­nol­ogy com­pa­nies”.

It ar­gued that moves by US al­lies such as Aus­tralia and New Zealand in ban­ning the com­pany from sup­ply­ing equip­ment for 5G net­works were a re­sult of pres­sure from the US.

“Such pres­sure from the US has made it very dif­fi­cult for some gov­ern­ments and com­pa­nies to make a de­ci­sion on their co-oper­a­tion with Huawei,” it said.

“What is badly needed for the de­vel­op­ment of US-China ties is po­lit­i­cal trust. Yet Wash­ing­ton, in per­suad­ing its al­lies to shun co­op­er­a­tion with Huawei, has helped erode that po­lit­i­cal trust.”

What­ever hap­pens to Meng, her ar­rest has meant there is a new Cold War be­tween China on the one side, and the US on the other, which will in­evitably draw Aus­tralia in.

At least one per­son at the Buenos din­ner was aware of what was about to go down — Trump na­tional se­cu­rity ad­viser John Bolton Aires

REUTERS

Ar­rested: Meng Wanzhou, the 41-year-old daugh­ter of the founder of telecom­mu­ni­ca­tions gi­ant Huawei

Trump

Xi

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