Published: Thu, December 06, 2018
Business | By Eloise Houston

Meng's arrest could plunge US, China into high-tech Cold War

Meng's arrest could plunge US, China into high-tech Cold War

Mark Warner want Canada to follow the USA and Australia and block Huawei from supplying equipment that would connect Canadians to the high-speed mobile network known as 5G.

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

Huawei Technologies Co.'s chief financial officer was arrested in Canada over potential violations of USA sanctions on Iran, provoking outrage from China and complicating thorny trade negotiations just as they enter a critical juncture.

In a statement on Wednesday, Canada's justice ministry said Meng was arrested in Vancouver on December 1.

Traders have quickly moved out of riskier assets reflecting nerves that the arrest is likely to escalate tensions between the United States and China once again.

US authorities have been probing Huawei since at least 2016 for allegedly shipping USA -origin products to Iran and other countries in violation of USA export and sanctions laws, sources told Reuters in April.

While Meng's arrest comes at a delicate time in U.S. "The ban was sought by Ms. Meng".

The broad market decline came as the arrest of a senior Chinese technology executive overshadowed some positive comments on trade from Beijing, threatening to worsen trade tensions between the US and China.

The U.S. has reportedly requested Meng be extradited to NY, where she would reportedly face federal charges of violating Iran sanctions.

In addition to serving as CFO, Meng is the daughter of Huawei founder Ren Zhengfei and is the deputy board chair.

Chinese officials on Wednesday demanded the return of Meng Wanzhou, the chief financial officer of Huawei Technologies and a member of its board, who was arrested by Canadian law enforcement in Vancouver on Saturday at the request of U.S. authorities.

The timing of the arrest could not have come at a worse time for Huawei.

The ministry said the USA 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.

"Americans are grateful that our Canadian partners have arrested the chief financial officer", he said.

In a statement issued exclusively to the News from Huawei's corporate head office, the company explained how Meng was "provisionally detained by the Canadian authorities on behalf of the United States of America, which seeks the extradition of..." "Huawei complies with all applicable laws and regulations where it operates, including applicable export control and sanction laws".

Huawei's biggest Chinese rival, ZTE Corp., was almost driven out of business this year when Washington barred it from buying USA technology over exports to North Korea and Iran.

It said that Canada, at the request of the U.S., had arrested a Chinese citizen "not violating any American or Canadian law".

Earlier this year, it barred United States companies from exporting to ZTE, effectively shutting down the firm.

U.S. President Trump has threatened to raise tariffs on Chinese goods in response to complaints that Beijing improperly pressures foreign companies to hand over technology.

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

The arrest is a top trending topic on Chinese social media, BBC Monitoring says, with many users criticising the U.S. and Canada for what they call "low" and "bullying" tactics.

Huawei Technologies Ltd., the biggest global supplier of network gear used by phone and Internet companies, has previously been the target of US security concerns. Since then, Huawei is facing operational difficulties in the U.S. and some other countries like Australia, New Zealand, etc.

U.S. media have also reported that Huawei is under investigation for potential violations of U.S. sanctions against Iran. 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. 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. "The US has identified that China has found a backdoor to enter the US market through venture capitalists and private investors but those are also now shutting down gradually".

Lenovo has also come under attack in the U.S. for allegedly selling compromised computers that expose users to spying.

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