China demands Canada release exec
BEIJING — China on Thursday demanded that Canada release an executive of Chinese tech giant Huawei who was arrested in a case that compounds tensions with the U.S. and threatens to complicate trade talks.
Wanzhou, chief financial officer of
Huawei Technologies Ltd., faces possible extradition to the United
States. The Globe and Mail newspaper, citing law enforcement sources, said she is suspected of trying to evade U.S. trade curbs on Iran.
Huawei, the biggest global supplier of network gear used by phone and internet companies, has been the target of deepening U.S. security concerns. Under President Donald Trump and his predecessor, Barack Obama, Washington has pressured European countries and other allies to limit use of its technology.
The U.S. sees Huawei and smaller Chinese suppliers as possible fronts for spying and as commercial competitors. The Trump administration says they benefit from improper subsidies and market barriers.
The timing of the arrest is awkward following the announcement of a U.S.-Chinese cease-fire in a trade war that has its roots in Beijing’s technology policy. Meng was detained in Vancouver on Saturday, the day Trump and Xi Jinping met in Argentina and announced their deal.
U.S. national security adviser John Bolton told NPR that there has been enormous concern about the practice of Chinese firms like Huawei allegedly using stolen U.S. intellectual property. He said that would be a major subject of negotiations with China.
Stock markets tumbled on the news, fearing renewed U.S.-Chinese tensions that threaten global economic growth. Stocks fell more than 780 points before the Dow Jones Industrial Average rallied to finish 79 points down.
A Chinese government statement said Meng broke no U.S. or Canadian laws and demanded Canada “immediately correct the mistake” and release her.
But the Ministry of Commerce signaled that Beijing wants to avoid disrupting progress toward a settlement with Washington over technology policy that has led them to raise tariffs on billions of dollars of each other’s goods.
China is confident they can reach a deal during the 90 days that Trump agreed to suspend U.S. tariff hikes, said a ministry spokesman, Gao Feng.
Trump’s tariff hikes on Chinese imports stemmed from complaints Beijing steals or pressures foreign companies to hand over technology. But U.S. officials also worry more broadly that Chinese plans for state-led creation of Chinese champions in robotics, artificial intelligence and other fields might erode U.S. industrial leadership.
Last month, New Zealand blocked a mobile phone company from using Huawei equipment, saying it posed a “significant network security risk.” The company was banned in August from working on Australia’s fifth-generation network.
On Wednesday, British phone carrier BT said it was removing Huawei equipment from the core of its mobile phone networks. It said Huawei still is a supplier of other equipment and a “valued innovation partner.”
Huawei’s biggest Chinese rival, ZTE Corp., was nearly driven out of business this year when Washington barred it from buying U.S. technology over exports to North Korea and Iran. Trump restored access after ZTE agreed to pay a $1 billion fine, replace its executive team and embed a U.S.chosen compliance team.
Huawei is regarded as far stronger commercially than ZTE. Huawei has the biggest research and development budget of any Chinese company and a vast portfolio of patents, making it less dependent on American suppliers.
Its growing smartphone brand is among the top three global suppliers behind Samsung Electronics and Apple.
Huawei said it complies with all laws and rules where it operates, including export controls and sanctions of the U.N., the U.S. and European Union.
Meng’s arrest also threatened to inflame disagreements over Iran and Trump’s decision to break with other governments and re-impose sanctions over the country’s nuclear development.
China objects to unilateral sanctions outside the United Nations. China has said it will continue to do business with Iran despite the possible threat of U.S. penalties.
Meng is a prominent member of China’s business world as deputy chairman of Huawei’s board and the daughter of its founder Ren Zhengfei.
Despite that, her arrest is unlikely to derail trade talks, said Willy Lam, a politics specialist at the Chinese University of Hong Kong.
“I think too much is at stake for Xi Jinping. He desperately wants a settlement,” said Lam.
However, the case will reinforce Chinese urgency about developing domestic technology suppliers to reduce reliance on the United States, said Lam.
Trump has “pulled out all the stops” to hamper Chinese ambitions to challenge the U.S. as a technology leader, Lam said. That includes limits on visas for Chinese students to study science and technology.
“If the Chinese need further convincing, this case would show them beyond doubt Trump’s commitment,” said Lam.