Published: Fri, December 07, 2018
Economy | By

White House, Trudeau seek to distance themselves from Huawei move

White House, Trudeau seek to distance themselves from Huawei move

Meng Wanzhouf, who is the daughter of the Chinese technology giant's founder Ren Zhengfei, was arrested on suspicion of violating U.S. trade sanctions against Iran, Canada's The Globe and Mail newspaper reported.

Canada on Saturday arrested Meng Wanzhou, Huawei's global chief financial officer, in Vancouver, where she is facing extradition to the USA on suspicion she violated US sanctions against Iran, the Globe and Mail newspaper reported on Wednesday. Reuters was unable to determine the precise nature of the possible violations.

Meng's arrest came at the behest of US authorities and is connected to an investigation into alleged violations of USA trade sanctions, a person familiar with the matter told Reuters.

Meng, 46, has been the CFO of Huawei Technologies since 2011 and vice chair of the company since March 2018.

The news sent shudders through Hong Kong and Shanghai markets, where tech firms were hammered.

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. Trump and Xi have been battling over tariffs, something that has set the US financial markets into a tailspin this week, causing the Dow to drop almost 800 points on Tuesday.

Meng's arrest during a stopover in Vancouver, announced by the Canadian authorities on Wednesday, pummelled stock markets already nervous about tensions between the world's two largest economies on fears the move could derail the planned trade talks.

It has been locked out of USA and some other markets for telecom gear, but has repeatedly insisted Beijing has no influence over it. Huawei has repeatedly insisted Beijing has no influence over it.

Brock University professor Charles Burton, a former Canadian diplomat who had served two postings in China, said Beijing was convinced the USA administration had pressured Canada to go ahead with the arrest. Trump and Xi had dined in Argentina on December 1 at the G20 summit. It employs more than 180,000 people and past year had revenue of about $93 billion.

Huawei has said it has "very little information regarding the charges and is not aware of any wrongdoing", and a spokesperson for China's Foreign Affairs Ministry told NBC News this morning that Canada must "effectively protect the legitimate rights and interests of the person concerned".

She was arrested while changing flights on Saturday.

"We have made solemn representations to Canada and the United States, demanding that both parties immediately clarify the reasons for the detention, and immediately release the detainee to protect the person's legal rights", ministry spokesman Geng Shuang told a regular press briefing. The Chinese embassy confirmed to the National Post that it was rescheduled "due to visa issues", however, and the delegation was still set to arrive late Thursday.

Thus, the arrest of Meng - which apparently had been planned through coordination by both Canadian and USA authorities - was seen by many hawkish Chinese analysts as a sign that the US government does not really intend to suspend aggressive actions against China. However, there is no evidence of it being a deliberate provocation by the USA rather than just an awkward coincidence. A spokesman for the US Attorney's office in Brooklyn, which Reuters has reported is investigating Huawei, declined to comment.

The arrest of Huawei CFO Meng Wanzhou earlier this week is sending shockwaves through both the USA and China.

"If someone from the United States is hoping to use threats to an individual's personal safety in order to add weight in the talks, then they have most certainly miscalculated", he said.

Arthur Kroeber, founder of Gavekal Dragonomics, said it was unlikely that Beijing would retaliate against the local USA business community, whose interests have partly overlapped with China's in the trade war and been a source of leverage for Beijing.

"If you have deep pockets, you have options", he said. "Actually it hurts them to make life difficult" for US companies.

A user of China's Twitter-like Weibo platform said Chinese should boycott products made by US tech giant Apple Inc and instead buy Huawei products to show support for one of China's national champions. -China relations, it was not clear if the timing was coincidental. Shortly afterwards a Canadian citizen in China was arrested and charged with spying. Trump restored access after ZTE agreed to pay a $1 billion fine, replace its executive team and embed a USA -chosen compliance team in the company.

The statement went on to say how Huawei complies with all applicable laws and regulations where it operates, "including applicable export control and sanction laws and regulations of the United Nations, USA and European Union".

Last month, New Zealand blocked a mobile phone company from using Huawei equipment, saying it posed a "significant network security risk".

Meng, who also has used the English names Cathy and Sabrina, served on the board of Skycom between February 2008 and April 2009, according to Skycom records filed with Hong Kong's Companies Registry. Huawei has also been taking heat in other markets.

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