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Huawei caught in the crosshairs of US-China trade war


nir

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On December 1, the same day as President Trump and President Xi sat down face to face at the G20, over grilled sirloin and caramel pancakes, to figure out how to resolve the trade war, Meng Wangzhou, the global chief financial officer and deputy chairman of Huawei, and the daughter of the firm's boss, was arrested in Canada and is now facing extradition to the US.

It is hard to overstate the symbolism and significance of this event. Huawei is the crown jewel of Chinese tech and Ms Meng is effectively its princess. Even though it's still not clear what the charges against her are - we know that the US has been investigating Huawei for possible violations of US sanctions on Iran - this is not simply a case about the arrest of one woman, or just one company.

 

This arrest could materially damage the relationship between the US and China at possibly one of the most sensitive times between the two countries in their long and torrid history.

 

"It could not come at a worse time and it is probably going to put a cloud over any upcoming negotiations," Vinesh Motwani of Silk Road Research told me. "The market had already turned more sceptical over the G20 agreement in recent days. This is only going to make the market more sceptical any deal can be reached. "

Rapprochement averted

Tensions have been rising between Washington and Beijing, not just on trade. But at that G20 meeting in Buenos Aires, it looked like the two sides had at least decided to talk, and thrash things out over a 90-day period.

 

Amongst those issues are technology concerns, which are front and centre of this trade war. Even if it wasn't clear how united China and the US may have been on the objectives, the very fact that discussions were taking place were seen as a semi-positive for the global economy.

 

'Hostage taking'

 

But this arrest is likely to be seen by China as an attack and "hostage taking", says Elliott Zaagman, who has covered the Chinese firm for the better part of the last two decades.

 

"China has a reputation for making agreements and not keeping them, not following through," he told me on the phone from Boston. "There's a theory that this could be a way for the US to hold Beijing to its word on the trade war."

If so, it is a move the Chinese media has not taken well.

 

"The US is trying to find a way to attack Huawei," says Hu Xijin, editor in chief of the Chinese and English editions of the Global Times - a publication often seen as a mouthpiece of the Chinese government.

 

"It is trying to keep Huawei down. That's why it has pressured its allies not to use Huawei's products. It is trying to destroy Huawei's reputation."

 

What Mr Hu is referring to is the recent rejection of Huawei's services by a number of US allies, including Australia, New Zealand and most recently the UK's BT which says it won't be using Huawei equipment in the heart of its 5G mobile network when it is rolled out in the UK (although it does still plan to use Huawei's mast antennas and other products).

 

There's no evidence of Huawei having ever been engaged in any spying or handing over of data to the Chinese government. In fact, whenever I talk to Huawei executives privately they tell me how frustrated they are because of how the US government and Western media unfairly paints them as a Chinese state-owned company that does Beijing's bidding.

 

Company sources tell me that Huawei should be seen as the modern, dynamic and law-abiding global firm that it is, and that the US's narrative is flawed and unfounded.

 

Still, Huawei's founder, the father of Ms Meng, is Ren Zhengfei - a former military officer in the Chinese army. And the fact remains, as Mr Zaagman points out in a recent piece for The Lowy Institute, "the firm's relationship with the Chinese People's Liberation Army remains an issue of concern and opacity".

 

Which is why the US says countries must be wary of Chinese companies like Huawei. Under China's laws, private companies and individuals may be obliged to hand over information or data to the government if they are indeed asked.

It's that possibility, government sources say, that is scaring them off doing business with Huawei.

 

Huawei has told me this is completely untrue, and other Chinese academics and business people have also rejected this notion.

 

Mr Hu of the Global Times agrees. "The Chinese government would not do this. China would not hurt its own enterprises. If it hurts its own companies, how would it benefit the country? Even if a middling or low-level official were to ask it, Huawei will have the power to refuse any kind of government request."

 

Many in China will see this as yet another attempt to contain the country's rise, by limiting its most global firm's access to international markets.

 

"This could further endanger Huawei's 5G aspirations outside of emerging markets," says Tony Nash of Complete Intelligence, on the line from the US.

 

"If Huawei is being investigated it could put both Huawei and ZTE on the back foot as other equipment makers gain a lead in North America, and potentially other developed markets".

Other countries

It's not just developed markets where Huawei may be losing ground. The scrutiny is building in emerging markets too. Industry sources tell me that the US has been putting pressure on Asian allies to stop them from using Huawei's equipment. The Solomon Islands and Papua New Guinea were the latest recipients of this pressure, and India is thought to be next.

 

So what does this mean? The gloves are off. You should be another no illusion what this latest move by the US means for the relationship between the world's two largest economies: things have taken a dramatic turn for the worse.

 

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Only thing  that was said was

Quote

 

The chief financial officer for China’s global tech giant, Huawei Technologies, has been arrested in Richmond and is facing extradition to the U.S.

According to a statement obtained by the Richmond News from the Department of Justice Canada, Wanzhou Meng was arrested in Vancouver on Dec. 1.

 

The News understands that an arrest was made at or near Vancouver Airport on Saturday.

 

“She is sought for extradition by the United States, and a bail hearing has been set for Friday,” Justice Canada spokesperson Ian McLeod told the News via email.

 

As there is a publication ban in effect, which was requested by Meng, the department declined to provide any further detail of the extradition.

 

https://www.richmond-news.com/news/update-chinese-tech-giant-huawei-tells-the-news-how-cfo-was-arrested-while-changing-flights-at-yvr-1.23520521

 

US media think it has to do with  this

Quote

 

U.S. subpoenas China's Huawei in probe over exports to Syria, others  June 2, 2016

 

WASHINGTON (Reuters) - The U.S. Commerce Department has issued a subpoena to Huawei Technologies Co Ltd [HWT.UL] as part of a probe into the Chinese technology company’s transactions in Cuba, Iran, North Korea, Sudan and Syria, the New York Times reported on Thursday.

 

https://www.reuters.com/article/us-huawei-tech-usa-idUSKCN0YO22R

 

if its why they holding her  it don't have nothing to do with a trade war it got to do with they had a subpoena and  Huawei  fail to show up for court since 2016 ...i been in  jail for the same thing before  not showing up for court  maybe she will get lucky and make bail . This happen before the Government even ban Huawei   they wanted  to question her and they never showed up for court witch makes you a  fugitive from Justice . And  it don't matter who you are are what you done they will come get you if they really want you  . if the  USA don't come get her they have let her go after so many days. at lest that's how it is in the USA if the  place that filed the report   don't show up,  not sure how it works over there in Canada . In the USA they even extradite people from state to state everyday.

 

But we really don't know why they holding her but that's what they speculate .  The Chinese embassy in Canada  has ask for her release. every thing else wrote is just fluff .  Meng put out a media ban so they not respecting her privacy .

 

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24 minutes ago, knowledge said:

its all about money

... and power and becoming/remaining a Super Power.

 

It's a game humans are super familiar with and have much practice playing and they love it more than anything else but they don't like talking about it.  Everyone knows the game, sees it being played, secretly cheers his/her team, but hush...

 

An open Secret and an open Knowledge, @knowledge.

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