A year since the arrest of Huawei’s Meng Wanzhou, US-China relations remain frayed and strained

US sanctions on Huawei are not expected to ease off amid the slow progress in hammering out an interim trade deal with China
The arrest proved to be the flashpoint that generated wide international attention to the US-China tech war

Meng Wanzhou

Li Taoin Shenzhen

Published: 6:30am, 1 Dec 2019

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When Meng Wanzhou stepped off a Cathay Pacific plane in chilly Vancouver on December 1 last year, little did she know that she was about to become a new pawn in a widening US-China trade war.

Having originally boarded in Hong Kong, Meng – chief financial officer of Chinese telecommunications giant Huawei Technologies and company founder Ren Zhengfei’s daughter – was switching flights on her way to sunnier climes in Mexico and thought her stop in the coastal Canadian city would only be a short one.

Three hours later, after being detained and interrogated by Canadian immigration officials over her role at Huawei and having had her luggage searched, Meng found herself arrested at the request of Washington.

While that arrest was not made public until December 5, authorities in Beijing were already making strident calls for Meng’s immediate release. Court proceedings later showed that the US issued an arrest warrant against her a few months earlier on the grounds that she covered up attempts by Huawei-linked companies to sell equipment to Iran, breaking US sanctions against that country.

“That was the point when the so-called tech war between the US and China received wide international attention,” said Paul Haswell, a partner who advises technology companies at international law firm Pinsent Masons. “I think Meng’s arrest was the first time that the US was seen to take such a strong approach [against a major Chinese tech firm].”

Haswell indicated that the tech dispute between the world’s two largest economies had been triggered about two decades earlier, when concerns increased over China’s forced technology transfer practices. Cases of intellectual property rights infringement and predatory pricing tactics by Chinese tech vendors, which offered their products cheaper than their Western counterparts, exacerbated the conflict, he said.

Since US-China trade tensions started more than a year ago, the Trump administration doubled down on its agenda by declaring war against Chinese technology firms in the name of US national security. US actions against Huawei, which is suspected of being a conduit for espionage, have escalated since then.

In May, the world’s largest telecoms equipment supplier and second biggest smartphone vendor was placed on a trade blacklist that restricts its access to US hi-tech components, such as chips and software. The Shenzhen-based company maintains that Washington has no evidence to support accusations that its products can be used to spy for China.

With the trade ban expected to cost Huawei’s US suppliers billions of dollars a year, some US officials caution that sweeping restrictions could cripple the country’s tech industry. Hardliners in Washington, however, continue to insist that China remains a security threat that must be addressed.

Meng’s arrest also prompted Ren, Huawei’s septuagenarian founder and chief executive, to put himself front and centre in the company’s media relations efforts. Before that incident, Ren was content to let his lieutenants do all the talking. Now he is everywhere, as political and economic headwinds still threaten to push Huawei’s overseas business off a cliff.

Huawei did not immediately respond to a request for comment.

More media coverage, however, is something that Meng’s lawyers see could be detrimental for her, as they attempt to thwart a US bid for her extradition from Canada to face fraud charges related to Huawei’s alleged breach of US sanctions on Iran. The lawyers are fighting an application by a media consortium, which includes the South China Morning Post, to allow cameras into the British Columbia Supreme Court.

They said such coverage of Meng’s extradition battle in court could draw the attention of US President Donald Trump and risk his making a “threatening and intimidating” intervention in her case. Meng’s formal extradition hearing is expected to begin in January and last until October or November 2020.

That legal manoeuvring comes as Beijing and Ottawa appear no closer to resolving their difficulties, following Meng’s arrest and the subsequent detention of Canadians Michael Kovrig and Michael Spavor in China on spying charges.

Canada’s new foreign minister, François-Philippe Champagne, described the release of the two Canadians as an “absolute priority” when he met his Chinese counterpart Wang Yi at a recent G20 meeting in Japan. But China’s ambassador to Canada, Cong Peiwu, has repeated Beijing’s stance that Meng must be released.

“Whilst we are a long way from finding out whether the charges against Meng will stand, we are learning that you cannot ignore that you may be subject to the laws of other jurisdictions when trading internationally,” Pinsent Mason’s Haswell said.

Washington is already considering expanding its power to stop more shipments of products with US technology to Huawei, as speculation mounts that efforts to reach an interim trade agreement with Beijing have proved slower than expected.

“For 2020, we don’t expect US sanctions on Huawei to ease off,” said Jean Baptiste Su, a principal analyst with Atherton Research in San Jose, California. “On the contrary, things could get worse before it gets better.”

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