China’s Huawei is one of the largest telecommunications equipment and services providers in the world. Ms. Meng Wanzhou, Huawei’s chief financial officer and daughter of the founder of the Chinese telecoms giant, was arrested in Vancouver, Canada on December 1, 2018, and could possibly face extradition to the US. The US has been investigating Huawei over possible violation of sanctions against Iran.
So while the republican President Donald Trump was at the G20 summit in Argentino, having his side discussions about trade issues with the Chinese President Xi Jinping, the daughter CFO of China’s largest telecom corporation was being arrested in Vancouver at the behest of US officials.
This story has legs.
As per the 12/6/18 Seeking Alpha report by Daniel Lacalle, “The G20 meeting in Buenos Aires had a primary objective: To reach an agreement between the United States and China.”
“However, the announced agreement is more a “diplomatic truce” than a real agreement.
The United States commits to delaying tariffs against China that would start on January 1st, 2019, and China commits to purchase more agricultural and energy products (LNG, liquefied natural gas), in addition to promising to advance in legal security, compliance with contracts, the opening of capital markets and protection of intellectual property.
“However, the wording is vague, the commitments are conditional and the time is limited.”
It can be stated that the confusion regarding President Trump’s version of a trade deal in the works with China, triggered the recent downturn in the US stock market.
Here is the rest of the story…
On December 6, 2018, BBC News published the following report, “Huawei CFO arrest ‘violates human rights’, China says”
“China has urged the US and Canada to “clarify” the arrest of Meng Wanzhou, Huawei’s chief financial officer.
“The daughter of the founder of the Chinese telecoms giant was arrested in Vancouver on 1 December and could face extradition to the US.”
“Details of the arrest have not been released but the US has been investigating Huawei over possible violation of sanctions against Iran.”
“China demanded her release, saying her detention was possibly a rights abuse.”
“Huawei is one of the largest telecommunications equipment and services providers in the world, recently passing Apple to become the second-biggest smartphone maker after Samsung.”
“Ms Meng has sought a publication ban on the details of the arrest, which has been granted by the courts. Huawei said it had little information about the charges and was “not aware of any wrongdoing by Ms Meng”.
“European shares hit a two-year low and indexes across Asia dropped sharply following the arrest.”
How has China responded?
“A Chinese foreign ministry spokesperson told reporters: “The detention without giving any reason violates a person’s human rights.”
“We have made solemn representations to Canada and the US, demanding that both parties immediately clarify the reasons for the detention, and immediately release the detainee to protect the person’s legal rights.”
“Meanwhile, Ms Meng’s arrest comes at a sensitive time for US-China relations. The nations are engaged in a trade war that has seen both impose duties of billions of dollars on one another’s goods.”
“But concerns the arrest would impact the 90-day tariff truce negotiated between the two nations at the G20 have not yet materialised. China announced in a regular press briefing on Thursday that it would “immediately” implement the measures agreed.”
“It also coincides with moves to restrict the use of Huawei technology in Western countries. The US, Australia and New Zealand have blocked the use of the Chinese firm’s equipment in infrastructure for new faster 5G mobile networks.”
What has Canada said?
“Canada’s ministry of justice confirmed the date and place of Ms Meng’s arrest and added: “She is sought for extradition by the United States, and a bail hearing has been set for Friday.”
“It said it could not say more as Ms Meng had sought a ban on the publication of details and this had been ordered by the courts.”
The gloves are off
By Karishma Vaswani, BBC Asia Business Correspondent
“It is hard to overstate the symbolism and significance of this event. Huawei is the crown jewel of Chinese tech and Ms Meng is effectively its princess.”
“Even though it’s still not clear what the charges against her are, this is not simply a case about the arrest of one woman, or just one company.”
“This arrest could materially damage the relationship between the US and China at possibly one of the most sensitive times between the two countries in their long and torrid history.”
“The gloves are off. Things have taken a dramatic turn for the worse.”
What could be behind it?
“US media have reported that Huawei is under investigation for potential violations of US sanctions against Iran.”
One report in the New York Times said the US commerce and treasury departments had subpoenaed the firm over suspected violation of sanctions against both Iran and North Korea.”
“US lawmakers have repeatedly accused the company of being a threat to US national security, arguing that its technology could be used for spying by the Chinese government.”
“Reacting to the arrest, US Senator Ben Sasse told Associated Press that China was aggressively engaged in undermining US national security interests, often “using private sector entities”.
“Americans are grateful that our Canadian partners have arrested the chief financial officer,” he added.”
“In a statement, Huawei said it had complied with “all applicable laws and regulations where it operates, including applicable export control and sanction laws and regulations of the UN, US and EU.”
“The arrest is a top trending topic on Chinese social media, BBC Monitoring says, with many users criticizing the US and Canada for what they call “low” and “bullying” tactics.”
Why is Huawei a concern to the West?
“Some Western governments fear Beijing will gain access to fifth-generation (5G) mobile and other communications networks through Huawei and expand its spying ability, although the firm insists there is no government control.”
“Security concerns recently led BT to bar Huawei equipment from the heart of the 5G network it is rolling out in the UK.”
“New Zealand has blocked Huawei equipment over national security concerns, after Australia imposed a similar ban on both Huawei and fellow communications firm ZTE.”
“The US has brought a number of legal cases against Chinese technology firms, with accusations such as cyber-security theft and violations of Iran sanctions.”
“Earlier this year, it barred US companies from exporting to ZTE, effectively shutting down the firm. The US later replaced the ban with a fine and governance changes.”
“The US has also restricted US firms from selling parts to Chinese chipmaker Fujian Jinhua.”
“The UK has not blocked firms from using Huawei, although BT, which dominates the UK’s telecoms network, said this week it would not use the Chinese firm’s equipment in its “core” 5G infrastructure.”
What are the Iran sanctions?
Donald Trump last month reinstated all the US sanctions on Iran that had been removed under a 2015 nuclear deal.”
“The re-imposed sanctions hit oil exports, shipping and banks – indeed all core parts of Iran’s economy.”
“Although there are some waivers, US Treasury Secretary Steven Mnuchin has said the US will “aggressively” target any firm or organisation “evading our sanctions”.