On Saturday, President Trump met with Chinese President Xi Jinping in Buenos Aires to discuss a trade agreement. On the same day, the Canadian authorities arrested the head of finance of the Chinese telecommunications company Huawei.
The arrest takes place at a delicate time in the trade talks, when countries send customs duties to products of the other countries. Trump and Xi had allegedly agreed on a 60-day truce before tariffs were extended to more goods. However, the arrest of Meng Wanzhou will weigh on future negotiations, as Beijing is likely to see the movement as part of a broader pattern of US aggression against China, says Paul Triolo, focusing on technology for the political risk consultancy Eurasia Group. There is the danger or even the likelihood that China will return the favor.
The arrest of Meng, who is also the daughter of Huawei founder Ren Zhengfei, allegedly has nothing to do with the ongoing US-China trade dispute. The charges against Meng were not published. However, it is reported in Canada Globe and Mail that it has been arrested on suspicion of circumventing US sanctions for selling US-made components to Iran; the delivery to the USA is imminent.
Arresting a C-level executive in a multinational is rare. After another Chinese telecommunications company, ZTE, admitted selling equipment to Iran, US companies banned them from selling equipment to ZTE. These sanctions might have reduced the company if the US had not been pushed back quickly, but had not brought charges against its executives. This makes Meng's arrest even more surprising.
"It's an amazing step when you look at the boldness," says Triolo. "It shows growing concern about China in general and Huawei in particular."
US companies competing with Huawei have long complained that the company steals their intellectual property, which Huawei denies. US officials recently accused China of failing to comply with an agreement between Xi and President Obama in 201
Historically, other countries have not shared US concerns over Huawei's world-leading manufacturer of telecommunications equipment, but that's starting to change. Australia banned its mobile operators from purchasing Huawei equipment for the construction of 5G networks earlier this year. British intelligence chief Alex Younger said this week that the decision to build Huawei's infrastructure is a "difficult decision," the New York Times reports. Canadian intelligence chief David Vigneault warned that private companies could use Canada's telecommunications sector for foreign countries, even though he did not call China or Huawei. Triolo says China will owe the US postponement of Huawei sentiment. Trump could use Meng's arrest as a bargaining chip during the trade negotiations, but the threat to the US is that China may be pushed too far. "It will be difficult for the Chinese government to surrender to US trade demands," Triolo said. "The media in China are picking up the issue that the US is unfair and harassing China."
So why should you take such an aggressive step during an important trade negotiation, as Beijing considers this particularly hostile? It may be a coincidence that Meng was arrested on the same day as the meeting between Trump and Xi, Triolo says. It is not clear if Trump knew about the planned arrest before he met Xi. National Security Advisor John Bolton told NPR he knew about the plan, but did not inform the president.
Whether or not Trump knew in advance that both the decision to arrest Meng and the date of arrest would reflect a lack of strategy. Part of the Trump administration, says Chas Freeman, senior fellow at the Watson Institute of Brown University, which served as interpreter of President Nixon in China in 1972. "I tend to think that this has not been coordinated just because there is an open job season against China," says Freeman.
Freeman fears that China will retaliate by arresting US executives doing business in China. In the longer term, he fears that US sanctions against Iran will cause companies from other countries, not just China, to avoid using US components.
The arrest, however, has the effect that in the Senate, the support of both parties is promoted by the senators from China, who favor harsher penalties against ZTE.
"There is ample evidence that no major Chinese company is independent of the Chinese government and the Communist Party – and Huawei, touted as the" national champion "by China's government and military, is no exception." Sen. Mark Warner (D-Virginia) said in a statement. "It has been clear for some time that Huawei, like ZTE, poses a threat to our national security, and now we know that Huawei, like ZTE, has violated the US Sanctions Act, and I hope the Trump administration will fully hold Huawei accountable Violations of the Sanctions Act, as was not the case with ZTE. "
" Well, "Senator Ben Sasse agreed on Twitter.
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