The Jerusalem Post

Chinese executive arrested on US request, clouding trade truce

- • By JULIE GORDON and CHRISTIAN SHEPHERD

VANCOUVER/BEIJING (Reuters) – The daughter of Huawei’s founder, a top executive at the Chinese technology giant, was arrested in Canada and faces extraditio­n to the United States, roiling global stock markets as it threatened to inflame Sino-US trade tensions again.

The shocking arrest of Meng Wanzhou, 46, who is Huawei Technologi­es Co Ltd’s chief financial officer, raises fresh doubts over a 90-day truce on trade that was struck between Presidents Donald Trump and Xi Jinping on Saturday – the same day she was detained.

Her arrest, which was revealed late on Wednesday by Canadian authoritie­s, is related to US sanctions, a person familiar with the matter said. The precise nature of the possible violations was unclear.

Sources said in April that US authoritie­s have been investigat­ing Huawei, the world’s largest telecoms equipment maker, since at least 2016 for allegedly shipping US-origin products to Iran and other countries in violation of US export and sanctions laws.

The arrest and any potential sanctions on the world’s second biggest smartphone maker could have major repercussi­ons on the global technology supply chain.

US stock futures and Asian shares tumbled as news of the arrest heightened the sense that a major collision was brewing between the world’s two largest economic powers, not just over tariffs but over technologi­cal hegemony.

Huawei is not listed, but China’s second-largest telecom equipment maker, ZTE Corp, sank nearly 6% in Hong Kong while most of the nearby national bourses lost at least 2%.

MSCI’s benchmark for global stocks declined 0.61%, and US markets were on track to open lower by 1% or more. Investors stampeded for the safety of government debt, pushing the yield on the US 10-year Treasury note back below 2.9% to its lowest level in three months.

Huawei is already under intense scrutiny from the US and other Western government­s about its ties to the Chinese government, driven by concerns it could be used by the state for spying purposes. It has been locked out of the US and some other markets for telecom gear. Huawei has repeatedly insisted Beijing has no influence over the company.

Meng, one of the vice chairperso­ns on the company’s board and the daughter of company founder Ren Zhengfei, was arrested on December 1 at the request of US authoritie­s, and a court hearing has been set for Friday, a Canadian Justice Department spokesman said. Trump and Xi had dined in Argentina on December 1 at the G20 summit.

Huawei, which generated $93 billion in revenue last year, confirmed the arrest in a statement. “The company has been provided very little informatio­n regarding the charges and is not aware of any wrongdoing by Ms. Meng,” it said.

She was detained when she was transferri­ng flights in Canada, it added.

Chinese Foreign Ministry spokesman Geng Shuang told a daily briefing on Thursday that China had asked Canada and the US for an explanatio­n of Meng’s arrest, but they have “not provided any clarificat­ion.”

The Chinese consulate in Vancouver has been providing her assistance, he added, declining further comment. On Wednesday, China’s embassy in Canada said it resolutely opposed the arrest and called for her immediate release.

In April, sources told Reuters that the US Justice Department probe was being handled by the US attorney’s office in Brooklyn. On Wednesday, the US Justice Department declined to comment, a spokesman for the US attorney’s office in Brooklyn also declined to comment.

LU XIANG, an expert on China-US relations at the state-backed Chinese Academy of Social Sciences, said the arrest of Meng is “extremely shocking”.

“If someone from the United States is hoping to use threats to an individual’s personal safety in order to add weight to the talks, then they have most certainly miscalcula­ted,” he said. “I believe that China’s government will use maximum force to fight for freedom and justice for Meng Wanzhou,” Xiang said.

Arthur Kroeber, founder of Gavekal Dragonomic­s, said it was unlikely that Beijing would retaliate against the local US business community, whose interests have partly overlapped with China’s in the trade war.

“You can play hardball with a small country but you can’t do it with the US,” he said.

A user of China’s Twitter-like Weibo platform said Chinese should boycott products made by US tech giant Apple Inc and instead buy Huawei products to show support for one of China’s national champions.

However, the topic ranked only 31st among trending items on Weibo as of Thursday afternoon, with many discussion threads apparently blocked, which is not unusual on China’s heavily censored internet.

Jia Wenshan, a professor at Chapman University in California, said the arrest “runs a huge risk of derailing the US-China trade talks.”

While Meng’s arrest comes at a delicate time in US-China relations, it was not clear if the timing was coincident­al.

The probe of Huawei is similar to one that threatened the survival of China’s ZTE Corp , which pleaded guilty in 2017 to violating US laws that restrict the sale of American-made technology to Iran.

Earlier this year, the US banned American firms from selling parts and software to ZTE, which then paid $1 billion this summer as part of a deal to get the ban lifted.

Huawei said it complies with all applicable US export control and sanctions laws as well as other regulation­s.

News of the arrest came the same day that Britain’s BT Group said it was removing Huawei’s equipment from the core of its existing 3G and 4G mobile operations and would not use the Chinese company in central parts of the next network.

In January 2013, Reuters reported that Hong Kong-based Skycom Tech Co Ltd, which attempted to sell embargoed Hewlett-Packard computer equipment to Iran’s largest mobile-phone operator, had closer ties to Huawei than previously known.

Meng, who also has used the English names Cathy and Sabrina, served on the board of Skycom between February 2008 and April 2009, according to Skycom records filed with Hong Kong’s Companies Registry. Several other past and present Skycom directors also appear to have connection­s to Huawei.

Meng’s arrest drew a quick reaction in Washington.

US Senator Ben Sasse praised the move and said that it was “for breaking US sanctions against Iran.” He added that “sometimes Chinese aggression is explicitly state-sponsored and sometimes it’s laundered through many of Beijing’s so-called ‘private’ sector entities.”

 ?? (Reuters) ?? RUSSIAN PRESIDENT VLADIMIR PUTIN (L) and Meng Wanzhou, Executive Board director of the Chinese technology giant Huawei, attend an investment forum in Moscow in 2014.
(Reuters) RUSSIAN PRESIDENT VLADIMIR PUTIN (L) and Meng Wanzhou, Executive Board director of the Chinese technology giant Huawei, attend an investment forum in Moscow in 2014.

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