Could the Huawei arrest threaten Trump’s trade truce?
Razor wire is seen on a fence at the Alouette Correctional Centre for Women, where Huawei CFO Meng Wanzhou is being held on an extradition warrant, in Maple Ridge, British Columbia, Canada December 8, 2018. Source: Reuters/David Ryder
THE arrest of one of the world’s biggest tech top executives is certainly newsworthy in itself and has understandably grabbed headlines across the globe. But the extradition request for Huawei’s chief financial officer, Meng Wanzhou, following her arrest in Vancouver on Dec 8, has implications beyond just one woman’s legal battle.
The United States wants to try Meng over allegations she covered up links to a subsidiary doing business with Iran, effectively breaching US sanctions. The case for her deportation to the US has been adjourned until Monday. If successful, and Meng is found guilty, she faces up to 30 years in prison.
It’s not the first time the Chinese tech giant has had a run-in with the US authorities. In 2012, the company was identified as a security risk, and only this summer US President Donald Trump signed a bill forbidding the US government from doing business with Huawei.
Huawei is one of the world’s biggest suppliers of network technology that underpins phone and internet communications, but its close ties to the Chinese government have been cause for concern.
China says Meng has done nothing wrong and has demanded her release. But her arrest has ratcheted up tensions further between two superpowers already embroiled is an escalating trade war.
News of the arrest sent shockwaves through global financial markets that were just starting to recover after a dinner between Trump and China’s President Xi Jinping at the G20 Summit appeared to call a truce on their trade spat.
According to the Guardian, Wall Street suffered early losses on Wednesday following news of Meng’s detention.
Russia’s President Vladimir Putin (L) and Meng Wanzhou, Executive Board Director of the Chinese technology giant Huawei, attend a session of the VTB Capital Investment Forum “Russia Calling!” in Moscow, Russia October 2, 2014. Picture taken October 2, 2014. Source: Reuters/Alexander Bibik
Shanghai and Tokyo markets also experienced falls of two percent overnight and the sell-off spread to Europe, where markets saw losses of more than three percent.
It was a sharp downturn after an optimistic start to the week due to Trump and Xi’s meeting. The pair agreed to hold off on any further tariff hikes on Chinese goods for 90 days. And made headway in closing America’s US$350 billion trade deficit. The positivity from both sides following the dinner buoyed markets that had been volatile in response to the uncertainty of the tit-for-tat dispute.
But this friendly atmosphere appears to have been short-lived with Meng’s arrest once again shining a spotlight on the fraught relationship.
Huawei is a jewel in China’s glittering tech crown, being the world’s biggest producer of telecom equipment, employing over 180,000 people and operating in over 170 countries and regions. This year, it beat out Apple to move into the spot of second largest smartphone maker.
The company was founded in 1987 by none other than Meng’s father, Ren Zhengfei; making the 46-year-old CFO’s arrest very significant.
While her arrest is unlikely to derail the 90-day truce agreed at the G20, it will probably make it harder to reach an agreement in the allotted timeframe.
While it appears that the timing of Meng’s arrest was coincidental, this is not the impression in Beijing, where the move is seen as a political play to create leverage on trade or cripple Chinese technology companies.
“Huawei is a symbol of pride and success in China, in much the same way as Apple and Microsoft are in the US. Many in China see this [Meng’s arrest] as the US trying not to compete but to disable its competitor. Others see it as another distraction to change the narrative in DC away from Trump’s legal and political troubles,” Einar Tangen, a China political affairs analyst, told Al Jazeera.
Huawei CFO Meng Wanzhou (L), who was arrested on an extradition warrant, appears at her B.C. Supreme Court bail hearing in a drawing in Vancouver, British Columbia, Canada December 7, 2018. Source: Reuters/Jane Wolsak
“Meanwhile, Huawei has been consistently singled out by America and its security allies as a national security threat – adding these things together makes this look questionable, at best.”
This drive from the US to stop Huawei’s sales has gone international with some of its closest and biggest allies being pressured to stop buying from the company. The governments of the United Kingdom, Australia and New Zealand have all moved to prevent Huawei technology being used in their future 5G mobile phone networks.
Meng’s arrest is another jab in a wider attack and if China feels it’s being unfairly targeted, it’s only a matter of time before they impose some kind of retaliatory measure, according to Kerry Brown, associate fellow for the Asia-Pacific Programme at Chatham House.
“For the moment, it seems that there is no immediate impact but these things linger in the system,” he told Al Jazeera.
“I don’t think the Chinese would be so sophisticated as to just respond directly, overtly and explicitly. They probably will take their revenge in other ways, which are not so straightforward.”
