With many questions still unanswered, governments in both the United States and China appear to be working to limit the fallout from the arrest of a top Chinese technology executive and its possible impact on trade negotiations.
News of the detention in Canada of Meng Wanzhou, tech giant Huawei’s chief financial officer, rocked markets across the globe. Many were quick to voice concern that the move could derail trade talks, and it came as both sides were hailing last weekend’s meeting between U.S. President Donald Trump and China’s Xi Jinping as a “big success.”
So far, Trump and his administration have been strangely quiet on the topic, analysts said.
Christopher Balding, a China scholar at Fulbright University Vietnam, said that from China’s perspective, Meng’s arrest was a political escalation and the Trump administration seemed to understand that.
“I think it is going to be very important that they say that these are the relevant laws, that they try to remove politics from this as much as possible, whatever the exact specifics of the case are,” Balding said.
“Even if this was completely and entirely divorced from anybody in the Trump administration, Beijing is going to receive it as a significant political escalation,” he said.
Ming Xia, a professor of political science and global affairs at City University of New York, said Meng’s arrest was another example of how members of Trump’s trade team know how to use very sharp, pinpoint moves to teach China a lesson.
“This is one of the U.S.’s many tactics and tools used in its trade war with China to maximize its gains. The arrest of Meng Wanzhou, I believe, should be seen in the context of the Sino-U.S. trade war,” Ming said.
For now, both sides have expressed their confidence that the agreement reached last week was a good one and their hope that it will be a success. How Meng’s case will play out remains to be seen.
China has demanded the chief financial officer’s release and labeled her detention a “gross violation of human rights.” Huawei has said “the company has been provided with little information regarding the charges and it’s not aware of any wrongdoing by Ms. Meng.”
At a hearing Friday in Vancouver, a Canadian prosecutor argued that Meng — who has spent most of the past week at a women’s detention facility in a suburb of Vancouver — should be denied bail pending possible extradition to the United States because she was a flight risk.
A prosecutor disclosed that Meng was wanted by the United States for allegedly deceiving financial institutions about the relationship between Huawei and another tech company, SkyCom, based in Hong Kong, that is alleged to have sold U.S.-manufactured technology to Iran, in violation of U.S. trade sanctions.
A judge is to rule on the bail request Monday.
Reports from Reuters have previously suggested that over the past decade, Huawei has struck deals to resell embargoed technologies, owned by U.S. companies including Hewlett-Packard, to sanctioned telecom operators in Iran.
Chinese state media have argued that the United States was abusing the law to hurt Huawei’s international reputation. However, concerns about Huawei have been growing for quite some time. Many view Huawei as a national security and privacy threat due to its close links to the Chinese government.
On Friday, there were reports that Tokyo appeared to be the latest country that plans to ban the purchase of Huawei products.
Earlier this week, Britain’s BT Group announced that it was removing Huawei Technologies equipment from 3G and 4G networks as well as banning it from core parts of the coming 5G network. Australia and New Zealand also have similar bans in place regarding fifth-generation networks.
On Thursday, The Wall Street Journal reported that a federally appointed monitor at HSBC Holdings flagged suspicious transactions in Huawei accounts. That information was passed on to federal prosecutors in the Eastern District of New York, the Journal report said.
Regardless of what violations might have occurred, it makes sense to go after Meng, CUNY’S Ming said.
“As the company’s vice president and chief financial officer, Meng Wanzhou would have been the one who signed off on all documents,” Ming said.
‘Moral support’ for Huawei
What China might do in response remains unclear. State media have suggested that society should offer Huawei some “moral support,” such as buying the company’s products.
Some have noted that U.S. tech executives would be wise to avoid traveling to China over the next two weeks, out of concern that they might get caught up in the tug of war over Huawei.
Fulbright University Vietnam’s Balding said the concerns make sense but added that China has also been getting very savvy at how it responds, finding more discreet ways to get even.
“Maybe they will just hack an American tech firm and take their IP [intellectual property] or something like that,” Balding said.
“To bring a trumped-up charge [against a U.S. tech executive], I think, would be very embarrassing for China internationally and really just reveal its true colors more.”