China Warns of 'Grave Consequences' Over Arrest of Huawei Executive

A Huawei ad in a Hong Kong subway.
Photo: Vincent Yu (AP)

China has warned the Canadian ambassador that if Meng Wanzhou, the chief financial officer of telecom and tech giant Huawei, is not released, there will be “grave consequences,” CBS News reported on Sunday.

According to CBS, Chinese officials told the ambassador that Meng’s detention while traveling through Canada on suspicion of violating U.S. trade embargoes on Iran—which could net her a 30-year sentence if she is extradited to the U.S. and convicted—is “unreasonable, unconscionable, and vile in nature”:

A report by the official Xinhua News Agency carried on the Foreign Ministry’s website said that Vice Foreign Minister Le Yucheng called in Ambassador John McCallum on Saturday over the Meng’s holding, who is reportedly suspected of trying to evade U.S. trade curbs on Iran.

... Le told McCallum that Meng’s detention at the request of the United States while transferring flights in Vancouver was a “severe violation” of her “legitimate rights and interests.”

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According to Bloomberg, the U.S. ambassador to China, Terry Branstad, received a similar summons in which he was warned that the detention violates “legitimate rights and interests of Chinese citizens and are extremely bad in nature” and “China will take further action based on the U.S. actions.”

Specifically, the New York Times wrote on Friday, prosecutors in Canada allege that from 2009-2014, Meng used a Hong Kong front company, Skycom Tech, to do business in Iran while Huawei cleared financial transactions through U.S. banks, causing said banks to be “victim institutions” of fraud. In 2013, the Times added, Reuters reported that Huawei was selling U.S. computer gear to an Iranian phone company via that pipeline. Meng then misled a U.S. financial institution with a Powerpoint presentation:

At the time, Ms. Meng arranged a meeting with an executive from one of the financial institutions, he said. During the meeting, she spoke through an English interpreter and presented PowerPoint slides in Chinese, saying that Huawei operated in Iran in strict compliance with United States sanctions. Ms. Meng explained that Huawei’s engagement with Skycom was part of normal business operations and that Huawei had sold the shares it once held in Skycom.

But there was no distinction between Skycom and Huawei, [Canadian prosecutors] said.

As Bloomberg noted, it remains to be seen how much of a big deal the row with the ambassador is as China “regularly calls in foreign diplomats” to lodge complaints. A separate piece in the Times on Sunday noted that the Chinese government appears to be taking steps to limit the Huawei issue’s interference with other attempts to stabilize the U.S.-China relationship, such as a recent trade-war truce between Donald Trump and Chinese President Xi Jinping—but that the arrest has nonetheless caused considerable anger in China, where many believe the U.S. is using illegitimate methods to forestall its economic rise. As CNBC noted, Meng is the daughter of the founder of Huawei, billionaire Ren Zhengfei.

Canadian prosecutors have warned the court to deny bail to Meng, saying that she has ample reason to try to flee Canada to avoid extradition stateside.

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In a statement to several media outlets, Huawei said, “We have every confidence that the Canadian and U.S. legal systems will reach the right conclusion.”

Huawei, which has relied on Chinese state banks to fund an aggressive overseas expansion, has faced suspicions in the West that it is selling telecommunications gear and phones that could be used for espionage purposes. The U.S. has banned government purchases of Huawei tech, while Australia and New Zealand have blocked Huawei from building 5G networks and Britain’s BT Group said it was removing the company’s gear from its existing 3G and 4G operations, CNBC reported. Japan is considering blocking government purchases of Huawei technology as well.

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Update: 12/9/2018, 6:05 p.m. ET: In what does not seem to be a particularly well thought-out plan on behalf of the Trump administration, CNN reported on Sunday that some U.S. officials believe they can use Meng as “leverage” during trade talks:

A Trump administration official says there is a plan for the United States to seek Meng’s extradition. The view among some officials is that she could be used as leverage with China in trade talks.

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It’s unclear whether the timing of Meng’s detention proceeded in complete isolation from the Trump administration’s trade talks with China or whether it was indeed coordinated as part of an attempt to send a message about U.S. strength. (While the White House said Trump was not aware of the extradition request before his meeting with Xi, National Security Adviser John Bolton said he was, according to CNN.) If the latter, Slate noted, it would “be an extraordinary breach of diplomatic convention, and one that would pose retaliatory risks for thousands of Americans working in China.”

[CBS News]

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Tom McKay

"... An upperclassman who had been researching terrorist groups online." - Washington Post