Thursday, December 06 2018

Markets Plumette, China Outraged, Relations With U.S. In Danger Over Arrest of Huawei CFO Featured

Written by John Carney
China on Thursday demanded the release of Meng “Sabrina” Wanzhou, the chief financial officer of Chinese telecommunications giant Huawei who was arrested by Canadian officials as U.S. and Chinese officials were reaching a trade truce in Buenos Aires on December 1.

Meng is one of the highest profile executives in China. She is the daughter of Ren Zhengfei, the 74-year-old former military engineer who founded Huawei decades ago, and is thought to be being groomed to succeed him and leader of the company.

“The Chinese side firmly opposes and strongly protests over such kind of actions which seriously harmed the human rights of the victim,” a spokesman for the Chinese embassy in Canada said in a statement.

“The Chinese side has lodged stern representations with the US and Canadian side, and urged them to immediately correct the wrongdoing and restore the personal freedom of Ms. Meng Wanzhou.”

Huawei is the top mobile phone maker in China. Beijing considers it a “national champion” and it is central to the country’s “Made in China 2025” scheme to dominate high-tech manufacturing.

As one of China’s few truly global brands, it has become something of a symbol for the nation around the world. The company is also the central actor in China’s bid to dominate next-generation 5G telecommunications technology.

Canadian officials arrested Meng at the request of U.S. officials, according to reports. She is expected to be extradited to New York, where she will face charges of violating sanctions against Iran.

The state-run Global Times said the arrest was a violation of the spirit of the trade truce reached during a dinner Saturday night between President Donald Trump and Chinese leader Xi Jinping at the end of the Group of 20 meeting in Argentina.

“Despite incomplete information about the incident, the US move obviously goes against the consensus reached between the heads of state of China and the US in Argentina,” the Global Times said in an editorial.

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

China’s embassy in Canada demanded the U.S. and its neighbor “rectify wrongdoings” and free Wanzhou Meng, who is also deputy chairwoman and the daughter of Huawei founder Ren Zhengfei. U.S. equity futures and Asian stocks slid as the episode reignited concerns about U.S.-Chinese tensions.

Meng’s arrest is likely to be regarded back home as an attack on one of China’s foremost corporate champions. While Alibaba Group Holding Ltd. and Tencent Holdings Ltd. dominate headlines thanks to flashy growth and high-profile billionaire founders, Ren’s company is by far China’s most global technology company, with operations spanning Africa, Europe and Asia.

China wants the U.S. and Canada “to clarify the grounds for the detention, to release the detainee and earnestly safeguard the legitimate rights and interests of the person involved,” Foreign Ministry spokesman Geng Shuang said Thursday at a press briefing.

Meng faces extradition to the U.S., said Ian McLeod, a Canada Justice Department spokesman, declining to elaborate. She was arrested Dec. 1 after the U.S. Department of Justice in April opened an investigation into whether the leading telecommunications-equipment maker sold gear to Iran despite sanctions on exports to the region.

The U.S. Department of Justice didn’t immediately respond to a request for comment Thursday.

Meng’s arrest came on the day that Donald Trump and Xi Jinping dined in Buenos Aires, setting in motion a truce in the rising U.S.-China trade tensions. But Huawei itself already had been a flashpoint between Washington and Beijing.

Huawei’s ambitions span artificial intelligence and chipmaking to fifth-generation wireless. That last effort, a massive push into the future of mobile and internet communications, has raised hackles in the U.S. and become a focal point for American attempts to contain China’s ascendancy.

Shares in several of its suppliers, from Sunny Optical Technology Group Co. and Largan Precision Co. to MediaTek Inc., fell.

Ren Zhengfei, a former army engineer, has won acclaim at home for toppling Apple Inc. in smartphones and turning an electronics reseller into a producer of networking gear with revenue surpassing Boeing Co.

He is regularly named among China’s top executives, and was among 100 business leaders honored for their contributions as the country celebrates the 40th anniversary of opening its economy. His stature at home is roughly comparable to Bill Gates or Michael Dell in the U.S.

“Tencent and Alibaba may be domestic champions and huge platforms in of their own rights, but Huawei has become a global powerhouse,” said Neil Campling, an analyst at Mirabaud Securities Ltd.

It is “5G standards that are at the heart of the wider IP debate and why the U.S. and her allies are now doing everything they can to cut to the heart of the Chinese technology IP revolution.”

Canada’s Globe and Mail newspaper first reported the arrest, about which the U.S. Justice Department declined to comment. A spokeswoman for Canadian Prime Minister Justin Trudeau referred questions to his country’s own justice department.

Huawei said the arrest was made on behalf of the U.S. so Meng could be extradited to “face unspecified charges” in the Eastern District of New York.

“The company has been provided very little information regarding the charges and is not aware of any wrongdoing by Ms. Meng,” it said in a statement.

“The company believes the Canadian and U.S. legal systems will ultimately reach a just conclusion. Huawei complies with all applicable laws and regulations where it operates, including applicable export control and sanction laws and regulations of the UN, U.S. and EU.”

U.S. Senator John Kennedy, a Republican from Louisiana, said those who cheat on sanctions have to “face consequences.”

“We ought to prosecute to the full extent of the law,” Kennedy said in a Bloomberg Television interview Thursday.

Senator Angus King, an independent from Maine, said China’s history of using retaliatory tariffs leavRead more at Breitbart Read more at Yahoo News

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