Huawei founder’s daughter arrested on US request

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Security officers guard the gate to the compound of the Huawei office in Beijing. Reuters

VANCOUVER/WASHINGTON (Reuters) – The daughter of Chinese tech giant Huawei’s founder has been arrested in Canada and is facing extradition to the United States, dealing a blow to hopes of an easing of Sino-US trade tensions and rocking global stock markets.

The shock arrest of Meng Wanzhou, who is also Huawei Technologies Co Ltd’s chief financial officer, raises fresh doubts over a 90-day truce on trade struck between Presidents Donald Trump and Xi Jinping on Saturday – the day she was detained.

The arrest is related to violations of US sanctions, a person familiar with the matter said. Reuters was unable to determine the precise nature of the violations.

The arrest and any potential sanctions on the world’s second biggest smartphone maker could have major repercussions on the global technology supply chain. Shares in Asian suppliers to Huawei, which also counts Qualcomm Inc and Intel among its major suppliers, tumbled yesterday.

Ms Meng, one of the vice chairs on the company’s board and the daughter of company founder Ren Zhengfei, was arrested on Dec 1 at the request of US authorities and a court hearing has been set for today, a Canadian Justice Department spokesman said. Mr Trump and Mr Xi had dined in Argentina on Dec 1 at the G20 summit.

Sources told Reuters in April that US authorities have been probing Huawei, the world’s largest telecoms equipment maker, since at least 2016 for allegedly shipping US-origin products to Iran and other countries in violation of US export and sanctions laws.

Huawei confirmed the arrest in a statement and said that it has been provided little information of the charges, adding that it was “not aware of any wrongdoing by Ms Meng”.

She was detained when she was transferring flights in Canada, it added.

China’s embassy in Canada said it resolutely opposed the arrest and called for Ms Meng’s immediate release.

In April, the sources told Reuters the US Justice Department probe was being handled by the US attorney’s office in Brooklyn.

The US Justice Department on Wednesday declined to comment. A spokesman for the US attorney’s office in Brooklyn also declined to comment.

The arrest drew a sharp response on Chinese social media.

A user of China’s Twitter-like Weibo platform said Chinese should boycott products made by US tech giant Apple Inc and instead buy Huawei products to show support for one of China’s national champions.

Jia Wenshan, a professor at Chapman University in California, said the arrest was part of a broader geo-political strategy from the Trump administration to counter China and it “runs a huge risk of derailing the US-China trade talks”.

Mei Xinyu, a researcher at a think tank run by the Ministry of Commerce, wrote in an article on the official People’s Daily Overseas Edition’s WeChat account that the arrest was a warning that the Trump administration might abandon its deal with China.

“We can be sure that in the near future a bumpy road of fights followed by talks will be the norm of China-US relations,” Mr Mei wrote. “China must become accustomed to this new environment of struggle and treat all of the US government’s promises with caution.”

While Meng’s arrest comes at a delicate time in US-China relations, it was not clear if the timing was coincidental.

Arthur Kroeber, founder of Gavekal Dragonomics, said it was unlikely that Beijing would retaliate in kind against the local US business community, whose interests have partly overlapped with China’s in the trade war and been a source of leverage for Beijing.

“You can play hardball with a small country but you can’t do it with the US,” he said. “Actually it hurts them to make life difficult” for US companies.

The probe of Huawei is similar to one that threatened the survival of China’s ZTE Corp, which pleaded guilty in 2017 to violating US laws that restrict the sale of American-made technology to Iran.

Earlier this year, the United States banned American firms from selling parts and software to ZTE, which then paid $1 billion this summer as part of a deal to get the ban lifted.

It was not immediately clear how Huawei’s business operations might be affected by the arrest.

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