Top Huawei executive detained in Canada, angering China

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OTTAWA, Dec 6, 2018 (BSS/AFP) – A top executive and daughter of the
founder of Chinese telecom giant Huawei has been arrested in Canada and faces
extradition to the United States, officials said Thursday, angering Beijing
days into a trade war truce with the US.

The detention of Meng Wanzhou, Huawei’s chief financial officer, comes
after American authorities reportedly launched an investigation into
suspected Iran sanctions by Huawei, which was already under scrutiny by US
intelligence officials who deemed the company a national security threat.

The arrest stirred tensions just as the United States and China agreed to
a ceasefire in their trade spat while negotiators seek a deal within three
months.

News of her detention rippled through stock markets in Asia, particularly
Shanghai and Hong Kong, with tech firms among the worst hit. By lunch
Shanghai was 1.3 percent lower while Hong Kong was 2.6 percent off.

“China is working creatively to undermine our national security interests,
and the United States and our allies can’t sit on the sidelines,” US Senator
Ben Sasse in a statement linking the arrest to US sanctions against Iran.

“Sometimes Chinese aggression is explicitly state-sponsored and sometimes
it’s laundered through many of Beijing’s so-called ‘private’ sector entities
that are in bed with (President) Xi (Jinping)’s communist party,” he added.

Meng was arrested in the western city of Vancouver on December 1, Canada’s
ministry of justice said in a statement.

The ministry said the US is seeking her extradition and she faces a bail
hearing on Friday, adding it could not provide further details due to a
publication ban that was sought by Meng, whose father, Huawei founder Ren
Zhengfei, is a former Chinese People’s Liberation Army engineer.

The arrest occurred on the same day that US President Donald Trump and Xi
struck the trade war truce at a summit in Argentina.

China’s embassy in Ottawa demanded Meng’s release.

“The Chinese side firmly opposes and strongly protests over such kind of
actions which seriously harmed the human rights of the victim,” the embassy
said in a statement.

“The Chinese side has lodged stern representations with the US and
Canadian side, and urged them to immediately correct the wrongdoing and
restore the personal freedom of Ms Meng Wanzhou.”

Huawei said it was unaware of any wrongdoing by Meng and was provided
“very little information” about the charges.

“Huawei complies 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 company said in a statement.

The Wall Street Journal reported in April that US Department of Justice
had opened an investigation into suspected violations of Iran sanctions by
Huawei.

The New York Times said the company had been subpoenaed by the Commerce
and Treasury Departments over alleged violations of Iran and North Korea
sanctions.

– ZTE case –

Huawei is not the first Chinese telecoms equipment firm to face the ire of
US authorities.

Earlier this year, the US imposed a seven-year ban on the sale of crucial
US components to Chinese smartphone maker ZTE after finding it had failed to
take action against staff who were responsible for violating trade sanctions
against Iran and North Korea.

The ban nearly killed the Chinese tech company, which said it was forced to
cease major operations in May.

A month later, Washington and Beijing reached a deal that would strike ZTE
from the sanctions list — just days after China reportedly offered to ramp
up purchases of American goods to help cut the yawning trade imbalance with
the US. American officials denied any connection between the two.

In exchange, ZTE agreed to pay a hefty $1 billion fine and put an
additional $400 million in escrow in case of future violations. It was also
ordered to replace its board of directors and retain outside monitors.

The case showed that China is highly dependent on imports of US-made
semiconductors or computer chips and reinforced Beijing’s need to become
self-reliant on this key technology.

– Espionage worries –

Huawei is one of the world’s largest telecommunications equipment and
services providers.

But despite global success, its US business has been tightly constrained
by worries it could undermine American competitors and that its cellphones
and networking equipment, used widely in other countries, could provide
Beijing with avenues for espionage.

In May, the Pentagon said that devices from Huawei and ZTE posed an
“unacceptable” security risk. Personnel on US military bases are banned from
buying equipment manufactured by the Chinese tech firms.

Over the summer, Australia barred Huawei from providing 5G technology for
wireless networks in the country over espionage fears.

New Zealand followed suit in November, but said the issue was a
technological one.

Britain’s largest mobile provider too has joined the global ban on Huawei.

On Wednesday, BT announced it was removing Huawei’s telecommunications
equipment from its 4G cellular network, following a warning from the head of
MI6 foreign intelligence service that singled out the Chinese company as a
potential security risk.

Despite being essentially barred from the critical US market, Huawei
surpassed Apple to become the world’s number two smartphone maker in the
second quarter of this year.

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