BEIJING — China called Thursday for the immediate release of a top executive at Huawei Technologies, the world’s largest maker of telecommunications network equipment, amid fears that her arrest in Canada could shatter the fragile truce in the trade war between Beijing and Washington.
Meng Wanzhou, Huawei’s chief financial officer and the daughter of Huawei’s founder, is set to appear in court Friday for a bail hearing after being arrested in Vancouver while changing planes Saturday.
Meng Wanzhou
Meng was arrested on a U.S. request because Huawei is suspected of trying to evade American sanctions on Iran, according to multiple news reports. U.S. prosecutors have been investigating since 2016 whether Huawei violated federal export and sanctions laws by shipping U.S.-origin products to Iran.
The arrest, made on the same day that President Trump and China’s Xi Jinping sat down for dinner together in Buenos Aires to negotiate a way out of their trade war, is being viewed in China as politically motivated.
The United States is “resorting to despicable hooliganism,” the nationalist Global Times wrote in an editorial published Thursday. “Anybody can see that the United States is maliciously picking holes in Huawei, trying to give it a hard time using the American legal system,” said the paper, which often reflects the foreign policy views of the ruling Communist Party.
The “persecution” of Huawei is “clearly contrary to the spirit of the consensus” forged between Trump and Xi, it said. The two sides are now entering talks to try to find a way out of the tit-for-tat tariff war within the 90-day time frame set by Trump.
The arrest added to trade jitters that have dragged down world markets in the past week. Major exchanges in Asia and Europe slumped sharply Thursday.
American analysts also were surprised at Meng’s arrest.
“My jaw dropped when I saw this news,” said James McGregor, chairman of the greater China region for APCO Worldwide, a business consultancy. “This is so different from anything we’ve seen before. Serious legal action taken with political timing.”
The Ministry of Commerce is trying not to let Meng’s arrest derail the trade talks. “The China and U.S. trade teams are now in smooth communication and good cooperation,” spokesman Gao Feng said. “We are full of confidence that China and the U.S. can reach an agreement within 90 days.”
But over at the Ministry of Foreign Affairs, spokesman Geng Shuang said the Chinese government has made “stern” and “solemn” representations to both the United States and Canada over Meng’s arrest.
“We have asked them to clarify the grounds for the detention, to release the detainee and earnestly safeguard the legal and legitimate rights and interests of the person involved,” Geng said.
The investigation into Huawei appears similar to a previous case against ZTE Corp., another Chinese telecommunications equipment company, which pleaded guilty last year to violating U.S. export sanctions on Iran. ZTE was initially blacklisted in the U.S., a move that brought it to the brink of bankruptcy. But after Trump’s intervention, that was downgraded to a $892 million fine and outside monitoring of its business activities.
But no one was detained or arrested in the ZTE case, and Huawei has not been formally accused of breaching the sanctions.
More than almost any other company, Huawei has come to symbolize the potential and the threat of a rising China. It has quickly become one of the pillars of the new, high-tech economy championed by Xi, who has ambitions for China to become the world leader in high-tech manufacturing.
Huawei employs 180,000 people in about 170 countries and earned $92.5 billion last year. It is the world’s third-largest seller of smartphones, after Apple and Samsung, and expects to sell 200 million handsets this year.
But the Shenzhen-based company has also become synonymous with a darker side of China’s rise, founded on suspicions that it has links to the Chinese military or security services.
The U.S., Britain, Australia and New Zealand – four of the five countries in the “Five Eyes” intelligence-sharing network, the other being Canada – have blocked Huawei from their networks on security grounds.
The suspicions of spying are based on Huawei’s founding by a man who spent 20 years in the People’s Liberation Army, including reportedly in a military technology division.
Some analysts questioned the timing of the arrest, if not the substance.
“There may be a legal basis for this, but politically, the timing is corrosive,” said James Zimmerman, a former head of the American Chamber of Commerce in China. “We’re in the middle of a some very sensitive, tense negotiations, and they’re doing something that is unprecedented in four decades of U.S.-China relations.”
In the past, China has retaliated swiftly against similar kinds of actions. The question now is whether Beijing will react this time and risk sparking a new battle in the trade war.
“I’ve never seen China take something like this lying down,” said McGregor, who has lived in China for nearly three decades. “For now, China seems to be taking a measured approach. But this could get ugly very quickly.”
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