Ar­rest deep­ens U.S.-China con­flict

Penticton Herald - - WORLD -

WASH­ING­TON — The dra­matic ar­rest of a Chi­nese telecom­mu­ni­ca­tions ex­ec­u­tive has driven home why it will be so hard for the Trump ad­min­is­tra­tion to re­solve its deep­en­ing con­flict with China.

In the short run, the ar­rest of Huawei’s chief fi­nan­cial of­fi­cer height­ened skep­ti­cism about the trade truce that Pres­i­dents Don­ald Trump and Xi Jin­ping reached last week­end in Buenos Aires, Ar­gentina. On Thurs­day, U.S. stock mar­kets tum­bled on fears that the 90-day cease­fire won’t last be­fore re­gain­ing most of their losses by the close of trad­ing.

But the case of an ex­ec­u­tive for a Chi­nese com­pany that’s been a sub­ject of U.S. na­tional se­cu­rity con­cerns car­ries echoes well be­yond tar­iffs or mar­ket ac­cess. Wash­ing­ton and Bei­jing are locked in a clash over which of the world’s two largest economies will com­mand eco­nomic and po­lit­i­cal dom­i­nance for decades to come.

“It’s a much broader is­sue than just a trade dis­pute,” said Amanda DeBusk, chair of the in­ter­na­tional trade prac­tice at Dechert LLP. “It pulls in: Who is go­ing to be the world leader es­sen­tially.”

Huawei, the world’s big­gest sup­plier of net­work gear used by phone and in­ter­net com­pa­nies, has long been seen as a front for spy­ing by the Chi­nese mil­i­tary or se­cu­rity ser­vices. A U.S. Na­tional Se­cu­rity Agency cy­ber­se­cu­rity ad­viser, Rob Joyce, last month ac­cused Bei­jing of vi­o­lat­ing a 2015 agree­ment with the U.S. to halt elec­tronic theft of in­tel­lec­tual prop­erty.

Other nations are in­creas­ingly be­ing forced to choose be­tween Chi­nese and U.S. sup­pli­ers for next-gen­er­a­tion “5G” wire­less tech­nol­ogy. Wash­ing­ton has been push­ing other coun­tries not to buy the equip­ment from Huawei, ar­gu­ing that the com­pany may be work­ing stealth­ily for Bei­jing’s spy­mas­ters.

The Huawei ex­ec­u­tive, Meng Wanzhou, was de­tained by Cana­dian au­thor­i­ties in Van­cou­ver as she was chang­ing flights Satur­day — the same day that Trump and Xi met at the Group of 20 sum­mit in Ar­gentina and pro­duced a cease­fire in their trade war. The Globe and Mail news­pa­per, cit­ing law en­force­ment sources, re­ported that Meng is sus­pected of try­ing to evade U.S. sanc­tions on Iran. She faces pos­si­ble ex­tra­di­tion to the United States, ac­cord­ing to Cana­dian au­thor­i­ties.

Bei­jing protested the ar­rest but sig­nalled that it doesn’t want to dis­rupt progress to­ward set­tling its trade dis­pute with the Trump ad­min­is­tra­tion. Chi­nese Com­merce Min­istry spokesman Gao Feng said China is con­fi­dent it can reach a deal dur­ing the 90 days that Trump agreed to sus­pend a sched­uled in­crease in U.S. im­port taxes on $200 bil­lion worth of Chi­nese prod­ucts.

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