Equity markets fell sharply in Asia after news media reported the arrest in Canada of Huawei’s chief financial officer Meng Wanzhou, pending extradition to the United States on charges of violating US sanctions against Iran.
The news has stunned financial market participants and policy analysts, for two reasons.
First, never before has the United States attempted the extraterritorial rendition of a foreign citizen – Meng is a Chinese national – in connection with sanctions violations. It has imposed travel and banking restrictions, but seeking an arrest warrant for this is entirely without precedent.
Earlier this year, the US government banned exports of US computer chips to the Chinese telecommunications equipment ZTE in retaliation for violations of sanctions against Iran, but sought no arrests.
Second, Meng was arrested on December 1, the day that President Trump and his economic team dined with President Xi Jinping and his advisers at the Group of 20 Summit in Buenos Aires. Trump has every interest in striking a deal with China that would enable him to declare some measure of victory in a trade war, and China has shown every indication that it is willing to make concessions to the United States on intellectual property protection, financial market opening and, at least in rhetoric, on industrial policy, while increasing its imports from the United States.
Who ordered arrest?
The question is: Who ordered the arrest, and why?
It is possible that President Trump knew about it and sanctioned the arrest, to be sure. But it is unlikely that the president would escalate the conflict with China with the arrest of a senior executive of China’s flagship high-tech manufacturer on the same day that he sought to de-escalate the trade war.
If Trump did not initiate the arrest, who did? There are two alternative possibilities.
The first is that the order came from administration officials who believe that the United States must provoke a confrontation with Beijing now, before China becomes too powerful to intimidate. Some parts of the permanent bureaucracy and the intelligence community believe that China’s economy is fragile and that an economic war would produce an economic crisis and political instability, perhaps even toppling Xi Jinping.
That view may seem fanciful, but it is argued seriously, for example by some former senior officials of the Trump administration.
The second possibility is that Trump’s enemies in the permanent bureaucracy simply want to prevent the president from negotiating a deal with China that would enhance his image and remove risks to economic growth.
The Trump administration has been uncharacteristically silent about the matter. Trump and his closest advisers have shown no hesitation to comment about China trade matters.
Beijing demands release
The only public comment from an American politician came from Senator Marco Rubio (R-FL), who earlier this year fought the Trump administration’s efforts to reach a settlement with ZTE. Rubio “celebrated the arrest” in an email to the website Axios.
The US Department of Justice declined to comment. The sanctions regime against Iran is the responsibility of the Treasury’s Office of Terrorism and Financial Intelligence, now directed by Undersecretary of Treasury Sigal Mandelker, a law enforcement veteran who served in the Bush Administration after the 9/11 attacks and advised Homeland Security Secretary Michael Chertoff during the George W. Bush Administration.
The Office of Terrorism and Financial Intelligence is a joint project with the Central Intelligence Agency. Undersecretary Mandelker’s predecessor in the position, attorney David Cohen, subsequently became a deputy director of the CIA. Ms Mandelker’s office initiated the administration’s sanctions against ZTE earlier this year. The Wall Street Journal reported on April 25 that the Justice Department was investigating whether Huawei violated American sanctions against Iran.
For its part, China expressed outrage at the arrest, and its embassy in Canada demanded the release of Meng.
Most of all, China’s government was taken by surprise, and is trying to understand what happened and why.
In any case, the Vancouver arrest raises serious issues. If the White House is behind the action, it casts doubt on the administration’s desire to come to any sort of accommodation with China.
Or, if the arrest was initiated by rogue elements in the administration, it would suggest that Trump is having difficulty controlling his own government.
Comrade I can tell you the arrests of Fang Fang, Dr He, Meng Hongwei and 1m uighurs has nothing to do with trade negotiations
The beginning of the end. Genius Trump’s a great tactician and fools will pay a high price. It’s been designed right from the start – China’s CCP capitulation and subjugation. If Xi Jin Pig don’t comply, total collapse of China’s eco is just around the corner.
Trump knows China’s funding of its increasing militarization and it’s increasing aggressiveness and belligerence to US allies and small countries has to STOP.
To all those dreamers out there, good luck and enjoy your ride while it last.
“Jinhua was a key cog in a campaign to move away from chip imports – an influx that surpasses China’s annual spending on oil. Now that vision is in jeopardy. To some, it seems a matter of time till the Trump administrations targets the other two designated national champions: Tsinghua Unigroup’s Yangtze River Memory and Hefei Changxin, run by the government of central Anhui province.
“The majority of market watchers believe that Hefei and Fujian Jinhua – both are central to Beijing’s ambitions to develop home-grown semiconductor behemoths – will be forced out of the market”
https://m.scmp.com/tech/big-tech/article/2175031/chip-maker-caught-us-assault-chinas-tech-ambitions
In a survey conducted by the American Chamber of Commerce, nearly two-thirds of U.S. firmsoperating in southern China were contemplating relocating manufacturing from China to a third country;
https://www.lawfareblog.com/sinotech-us-commerce-department-bans-sales-fujian-jinhua
The beginning of the end. Genius Trump’s a great tactician and fools will pay a high price. It’s been designed right from the start – China’s CCP capitulation and subjugation. If Xi Jin Pig don’t comply, total collapse of China’s eco is just around the corner.
Trump knows China’s funding of its increasing militarization and it’s increasing aggressiveness and belligerence to US allies and small countries has to STOP.
To all those dreamers out there, good luck and enjoy your ride while it last.
“Jinhua was a key cog in a campaign to move away from chip imports – an influx that surpasses China’s annual spending on oil. Now that vision is in jeopardy. To some, it seems a matter of time till the Trump administrations targets the other two designated national champions: Tsinghua Unigroup’s Yangtze River Memory and Hefei Changxin, run by the government of central Anhui province.
“The majority of market watchers believe that Hefei and Fujian Jinhua – both are central to Beijing’s ambitions to develop home-grown semiconductor behemoths – will be forced out of the market”
https://m.scmp.com/tech/big-tech/article/2175031/chip-maker-caught-us-assault-chinas-tech-ambitions
In a survey conducted by the American Chamber of Commerce, nearly two-thirds of U.S. firmsoperating in southern China were contemplating relocating manufacturing from China to a third country;
https://www.lawfareblog.com/sinotech-us-commerce-department-bans-sales-fujian-jinhua
Any companies who Sell weapons to Taiwan are endangering the security of China. China should arrest anyone who gets involved in the arms deals with Taiwan, and convicthiminaChinese Court. .
Any companies who Sell weapons to Taiwan are endangering the security of China. China should arrest anyone who gets involved in the arms deals with Taiwan, and convicthiminaChinese Court. .
Perhaps the US could apply consistent rules when it decides who, what and when to sanction to earn some credibility. In any case the world is sick of this wily nily way of applying sanctions to suit itself. Both China and India purchase the S400 military system from Russia. The US sanctions China but does not sanction India.
Perhaps the US could apply consistent rules when it decides who, what and when to sanction to earn some credibility. In any case the world is sick of this wily nily way of applying sanctions to suit itself. Both China and India purchase the S400 military system from Russia. The US sanctions China but does not sanction India.
Agree that US does not own the world. Never will it happen.
If you deliver US made products to US enemies or countries under sanctions then you are subjects to their laws. This is clearly stated in US policies when dealing with its companies. China is being taught a hard lesson in compliance.
Agree that US does not own the world. Never will it happen.
If you deliver US made products to US enemies or countries under sanctions then you are subjects to their laws. This is clearly stated in US policies when dealing with its companies. China is being taught a hard lesson in compliance.
ខ្ជិល ដាក់ឈ្មោះ It is a resident "China affairs" hyena. Just ignore it.
It is US domestic law, not an international law. US does not own the world and has no right to impose its domestic laws on other countries.
It is US domestic law, not an international law. US does not own the world and has no right to impose its domestic laws on other countries.
“International law”? Are you drunk?
“International law”? Are you drunk?
If there’s no evidence she should be released. That’s following the law. If there’s evidence she must be convicted and her company sanctioned like ZTE. No way should this be tolerated. This is not China where people have no voice and no democracy and the law is dictated the CCP.
If there’s no evidence she should be released. That’s following the law. If there’s evidence she must be convicted and her company sanctioned like ZTE. No way should this be tolerated. This is not China where people have no voice and no democracy and the law is dictated the CCP.
We are not interested who ordered the arrest. Picking on a woman and a child of Huawei’s CEO is plain dirty and cowardly.
As the president, Trump has to withdraw the extradition order and release the woman. Are we to see tit for tat arrests of US CFOs on false charges all over the world?
We are not interested who ordered the arrest. Picking on a woman and a child of Huawei’s CEO is plain dirty and cowardly.
As the president, Trump has to withdraw the extradition order and release the woman. Are we to see tit for tat arrests of US CFOs on false charges all over the world?
Nobody gave the green light. In the US if you violate the law you suffer the consequences. Like trade violations of WTO and Hague UNCLOS international ruling, To be respected, China must learn how to comply and follow rules and international law. The international community of nations and democracies must act forcefully. Just what it’s doing against small nations, China must be stopped from bullying it’s way in everything. Somebody has got to put a stop.
Nobody gave the green light. In the US if you violate the law you suffer the consequences. Like trade violations of WTO and Hague UNCLOS international ruling, To be respected, China must learn how to comply and follow rules and international law. The international community of nations and democracies must act forcefully. Just what it’s doing against small nations, China must be stopped from bullying it’s way in everything. Somebody has got to put a stop.