Huawei CFO arrest outrages China and rattles markets

John Bolton

Huawei Technologies' chief financial officer Meng Wanzhou was arrested Saturday in Canada and faces extradition to the U.S. Meng was taken into custody on behalf of the U.S. while she was transferring flights in Vancouver, the tech company said.

Geng told reporters on Thursday that neither Canada or the US had so far responded to China's concerns, reports the Associated Press. The ban was sought by Meng, who has a bail hearing Friday, he said. Meng was detained in Vancouver but is facing potential extradition to the USA, which had earlier opened an investigation into whether Huawei sold equipment to Iran despite sanctions on exporting there.

In April, China appealed to Washington to avoid damaging business confidence following a Wall Street Journal report that US authorities were allegedly investigating whether Huawei violated sanctions on Iran amid spiralling technology tensions.

Huawei said in a statement Wednesday it has not been provided many details about Meng's arrest.

Chinese officials are loudly calling for Meng's release and want Canada to reveal the reason for her arrest.

Meng, 46, is deputy chairwoman of Huawei Technologies, one of China's telecom giants and a family business founded in 1987 by her former military-engineer father Ren Zhengfei.

Worse still, the continuing negotiations in the US-China trade war have only been set aside in recent days on a temporary basis and this move is likely to be seen by China as extremely inflammatory to the talks.

The ban almost destroyed the Chinese tech company, forcing it to cease major operations in May.

The United States has been looking into whether Huawei Technologies Ltd violated U.S. sanctions against Iran since at least 2016 and more recently the company's use of HSBC Holdings Plc to make illegal transactions involving Iran.

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.

The U.S. Justice Department on Wednesday declined to comment.

Following the report, the USA eventually banned Huawei from bidding for US government contracts.

The arrest is believed to be related to alleged violations of United States sanctions though there has been no official statement from Washington.

Analysts have warned that the arrest of Huawei's Chief Financial Officer Meng Wanzhou may have major repercussions for American tech companies and Washington's ongoing trade war with China, with some experts suggesting that China could retaliate by arresting US citizens. For Canada, the arrest could sour the chances of improving trade ties with Beijing as Ottawa looks to strike more global economic allies in the wake of the NAFTA 2.0 skirmish with the U.S.

It shed 0.6 per cent against the US dollar to $0.7229. The Shenzhen-based company said it complies with all applicable laws and regulations where it operates "including applicable export control and sanction laws and regulations of the UN, US and European Union".

The arrest of a senior official in a company Beijing sees as the crown jewel of its tech companies came less than a week after China and the United States agreed to a 90-day truce after months of tit-for-tat trade tariffs, fuelling market concerns about whether the USA and China could agree on a permanent trade deal before the trade ceasefire ends on March 1.

"The Chinese will absolutely interpret it as being directly connected", said Dean Cheng, a Heritage Foundation senior research fellow on Chinese political and security affairs.

The volatility put a spotlight on doubts about Trump's ability to deliver on his promises with China - and exposed a clash between his policy goals in China and his efforts to crack down on technology companies and other actors.

The Chief Financial Officer of Huawei Technologies has been arrested in Canada.

Huawei recently surpassed Apple to become the world's second-biggest smartphone-maker behind only Samsung. "We certainly don't inform the President on every one of them".

US Senator Ben Sasse praised the action and said that it was "for breaking US sanctions against Iran".

Gordon Houlden, director of the China Institute at the University of Alberta, said Canada and the USA have an extradition treaty and Canada has obligations that not even the prime minister can change.

The probe of Huawei is similar to one that threatened the survival of China's ZTE Corp, which pleaded guilty in 2017 to violating us laws that restrict the sale of American-made technology to Iran.