Arrest of China executive boosts trade war worries
As President Donald Trump was arranging a trade truce with President Xi Jinping of China in Buenos Aires, Argentina, over dinner Saturday night, his administration was coordinating the arrest of a top Chinese technology executive who was flying through Canada.
White House officials, including John Bolton, the national security adviser who attended the dinner with Trump and Xi, knew of the impending arrest. So did a leading Senate Republican and Democrat. But it is unclear whether Trump knew of the arrest. And Xi was apparently never told at the dinner.
The detention is a boon to administration officials trying to limit the global spread of Chinese technology, especially equipment that poses security risks, and to enforce sanctions with Iran. But the move threatens to upend sensitive talks to resolve a trade war between the world’s two largest economies.
Global markets fell Thursday amid intensified concerns about an emerging cold war between the United States and China, a sign that the 90-day trade truce announced by
Trump and Xi would not quickly produce an end to the trade war.
The arrest of Meng Wanzhou, chief financial officer of Huawei and daughter of its billionaire founder, was the culmination of a monthslong investigation by a Brooklyn office of the Justice Department into whether the flagship Chinese company had violated Iran sanctions, U.S. officials said. She was detained Saturday while in transit in Vancouver, B.C., at the request of the United States, which now wants her extradited.
Bolton told NPR in an interview Thursday that he knew in advance that Meng’s arrest was coming. He said such notifications from the Justice Department “happen with some frequency,” and “we certainly don’t inform the president on every one of them.”
The Justice Department typically briefs the White House in advance of actions in cases that are going to garner national attention or impact the public interest. Before Meng was arrested, Justice Department officials notified the White House office of legal counsel, according to an administration official.
The department also notified the chairman of the Senate Intelligence Committee, Richard Burr, R-N.C., and its ranking Democrat, Mark Warner of Virginia, according to a committee staff member.
Xi was apparently never told of the intent to arrest Meng at the dinner with Trump, where Bolton was present. The arrest came as a surprise to the Chinese government, which is calling for her immediate release and has accused the United States and Canada of human-rights violations.
“To detain someone without giving clear reason is an obvious violation of human rights,” Geng Shuang, a spokesman for China’s Foreign Ministry, said at a news conference Thursday.
While Meng’s arrest is a warning to other nations about the administration’s intolerance of economic sanction violations and its security concerns about doing business with Chinese technology companies, it further complicates efforts to resolve the United States’ trade war with China.
Trump has prioritized both curbing China’s rise as a technological powerhouse and enforcing economic sanctions on Iran. At the same time, he has increasingly linked trade matters with national security – imposing new restrictions on Chinese investment in the United States and hitting China with tariffs on $250 billion worth of Chinese goods, including many products that the administration views as critical to U.S. national security, like nuclear reactor parts and semiconductors.
Trump argues that tougher sanctions will force Iran to abandon its nuclear weapons program, and in May he said the United States was withdrawing from a multinational agreement forged by President Barack Obama.
The Justice Department has not revealed exactly what Huawei was doing to run afoul of the sanctions. Chinese companies regularly do business in Iran, and much of that trade complies with sanctions regulations. But the
Trump administration previously punished another Chinese telecom firm, ZTE, for violating U.S. sanctions against Iran and North Korea. The question over Huawei appears to be whether it violated sanctions by selling technology from the United States to Iran or in some other manner.
“In the past we have dealt with these cases by interrupting the legal process to avoid offending the Chinese Communist Party,” said Robert Spalding, a retired Air Force general who was on the National Security Council until January.
China continues to be the biggest buyer of Iranian oil, while the United States aims to lower Iran’s oil exports to zero. When it imposed a round of strict sanctions on Iran last month, the United States had to grant China and a handful of other nations waivers to continue buying oil for six months.
Huawei and Meng are at the top of China’s corporate world, thrusting diplomatic and policy issues in the mix along with law enforcement priorities as the Trump administration weighs its next moves.
The arrest means the trade talks will almost certainly become more difficult. China could cancel upcoming rounds of the talks; in September, China canceled talks after Trump announced new tariffs.
An investor reacts Thursday near boards displaying stock market prices in Beijing, China. Asian stock prices skidded after the arrest of a senior official at Chinese telecom equipment maker Huawei that could derail trade talk progress.