Canada has arrested Huawei's CFO for extradition to the US

Roman Schwartz
December 6, 2018

The U.S. has also banned all governmental agencies from buying or using Huawei phones or equipment.

Dow futures slide after the arrest of Huawei CFO Meng Wanzhou in Canada; Doug McKelway reports from the White House.

Hong Kong: Shares across Asia plunged Thursday, with technology firms in Hong Kong and Shanghai battered after the arrest of a top executive at Chinese telecoms giant Huawei that has also fuelled fears about the recent China-US trade deal.

The arrest was reported earlier by Canada's Globe and Mail newspaper.

The arrest came days after President Donald Trump met with Chinese President Xi Jinping to discuss the two nation's escalating trade dispute.

Jia Wenshan, a professor at Chapman University in California, said the arrest was part of a broader geo-political strategy from the Trump administration to counter China and it "runs a huge risk of derailing the US-China trade talks".

"The company has been provided very little information regarding the charges and is not aware of any wrongdoing by Ms Meng", the company said.

"At the request of the US side, the Canadian side arrested a Chinese citizen not violating any American or Canadian law", the Chinese Embassy in Canada said on Thursday.

The Wall Street Journal notes that USA authorities want to bring Meng to federal court in the Eastern District of NY.

The SCMP obtained a transcript of an internal question-and-answer between Meng and her father, Huawei's founder Ren Zhengfei.

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The chief financial officer of Chinese telecommunications giant Huawei has been arrested in Canada at the request of the United States over alleged Iran sanctions violations.

But if China's wrath over the Huawei arrest "continues to ferment, it will ruin the progress the two countries have made", said Chen Qi, a resident scholar at the Carnegie-Tsinghua Center for Global Policy.

"If a couple of Canadian nationals are arrested somewhere as a bargaining chip, it may not be surprising", he said.

The news came as Washington and Beijing begin three months of negotiations aimed at de-escalating their bruising trade war, which is adding to global investors' worries over rising USA interest rates and other risks to global economic growth. Federal authorities said ZTE had violated American sanctions against Iran and North Korea, in a move that caused the Chinese company to cease "major operating activities" for a time. He said arresting her without that violated her human rights. China's state-run media hailed the trade war truce with the United States as "momentous" but warned of complex negotiations ahead.

Meng's arrest has "potentially huge implications" for the trade war and signals the U.S. government is willing to get tough on Chinese companies that do business with Iran, according to Michael Every, head of Asia-Pacific research at investment bank Rabobank.

China says it "firmly opposes and strongly protests" the arrest of Meng and calls for her immediate release. Trump restored access after ZTE agreed to pay a $1 billion fine, replace its executive team and embed a US-chosen compliance team in the company.

He added that proper handling of the case would help to resolve contentious issues between China and the United States, including cyber theft.

Huawei, China's largest telecom equipment maker, has been under investigation into whether it had broken USA trade controls to countries including Cuba, Iran, Sudan and Syria. It surpassed Apple in smartphone sales in the second quarter of this year, leaving it behind only market leader Samsung. Huawei seems much stronger commercially than ZTE, with the biggest research and development budget of any Chinese company and a vast portfolio of patents, making it less dependent on American suppliers.

U.S. media have also reported that Huawei is under investigation for potential violations of U.S. sanctions against Iran.

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.

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