Published: Fri, December 07, 2018
Money | By Wilma Wheeler

Huawei CFO's Arrest Thrusts Chinese Tech Champion Into Trade War

Huawei CFO's Arrest Thrusts Chinese Tech Champion Into Trade War

The daughter of Chinese tech giant Huawei's founder has been arrested in Canada and is facing extradition to the United States, dealing a blow to hopes of any easing of Sino-US trade tensions and rocking global stock markets. A Canadian official said law enforcement took her into custody at the request of the US, which is seeking her extradition for allegedly violating its sanctions on Iran.

Earlier this year, six top United States intelligence chiefs voiced their concerns about Huawei phones to the Senate Intelligence Committee, with FBI Director Christopher Wray saying he was "deeply concerned about the risks of allowing any company or entity that is beholden to foreign governments that don't share our values to gain positions of power inside our telecommunications networks". The Trump administration says they benefit from improper subsidies and market barriers.

China says it "firmly opposes and strongly protests" the arrest of Meng and calls for her immediate release.

China's foreign ministry urged Canada and the United States to "clarify" the reason Ms Meng was detained. "The detention without giving any reason violates a person's human rights", said a Chinese foreign ministry spokesperson.

Meng's arrest comes as Ottawa and Beijing have been engaged in exploratory talks on a free trade agreement for the past two years, which would be the first deal of its kind between China and a western country.

Trump's tariff hikes this year on Chinese imports stemmed from complaints Beijing steals or pressures foreign companies to hand over technology. He said targeting Huawei, one of its most successful companies, "will trigger anti-US sentiment".

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

There had already been concerns in the U.S. over the security of Huawei's technology amid worries that the Chinese government could use the tech company's products to spy on Americans, an allegation the company has long denied. The company was banned in August from working on Australia's fifth-generation network.

Huawei later said the HP equipment was ultimately not provided to Iran either by Huawei or Skycom, Reuters said.

Skycom at the time was a major partner of Huawei. But the Wall Street Journal reported in April that USA authorities were investigating whether Huawei violated sanctions on Iran, leading the Chinese government to appeal to Washington to avoid any steps that might have damaged business confidence. The Chinese government appealed to Washington to avoid any steps that might damage business confidence. Early in April, Reuters had reported that since at least 2016, the US attorney's office in Brooklyn has been probing Huawei's alleged shipping of USA -origin products to Iran and other countries in violation of USA export and sanctions laws.

An executive with a US-based multinational company, meanwhile, said the incident may not be part of Trump's tactics.

Huawei is regarded as far stronger commercially than ZTE.

News of her detention rippled through stock markets in Asia, particularly Shanghai and Hong Kong, with tech firms among the worst hit.

Its growing smartphone brand is among the top three global suppliers behind Samsung Electronics and Apple number of handsets sold.

Meng Wanzhou is facing extradition to the United States on charges which are said to relate to U.S. sanctions.

David Mulroney, a former Canadian ambassador to China, said US and Canadian business executives could face reprisals in China. "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 European Union".

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. But he also said China has a "very long history" of not living up to its trade promises.

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