Huawei’s CFO arrest declaration of war on China’s business community

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Ms Meng Wanzhou,chief financial officer of telecom giant Huawei. Supplied

The arrest of Huawei CFO Meng Wanzhou is a declaration of war by the US to further its attempt to cripple Beijing’s corporate sector through tariffs and the destruction of deals in order to assert dominance over China, several experts say.

Jeffrey D Sachs, American economist and director of Columbia University’s Center for Sustainable Development, notes that the US “rarely arrests senior business people, US or foreign, for alleged crimes committed by their companies.”

Since 2010, 29 banks have breached US sanctions, including mega lender US financier JPMorgan Chase, which paid $88.3 million in fines in 2011 for violating US sanctions on Cuba, Iran and Sudan.

But no top brass at those banks were nabbed. “Jamie Dimon (JP Morgan CEO) wasn’t grabbed off a plane and whisked into custody,” Mr Sachs says.

Huawei, among the prime movers in China’s ambitious technology industry, has emerged as a target for the Trump administration that claims – without providing evidence – the firm has embedded hidden surveillance equipment in its hardware and software.

China’s blooming tech scene – led by global manufacturing giant Huawei – has come under fire as the government embarks on Made in China 2025 – a plan to spur domestic production of advanced technology and drive job creation.

For the Chinese corporate world, the arrest of Ms Meng, which occurred on the same night China’s President Xi Jinping and US President Donald Trump reached a trade truce on the sidelines of the G20 summit, is an unprecedented incident – and not just because of the way it played out at the Vancouver airport, where Ms Meng was arrested en route to Mexico from Hong Kong.

Through the shock arrest of Ms Meng, the US has effectively declared war on China, at least from the perspective of the Chinese business community, CNBC said last week.

The timing of the arrest also threatens to derail all progress made by US and Chinese officials on trade talks up to now, and also reflects the discord that lies within Trump’s administration. National security adviser John Bolton claims he was informed of the pending arrest by the US Justice Department, but did not pass that information to the president.

That no one in the White House weighed the implications of her arrest on the trade truce between China and the US is “astonishing,” argues Zachary Karabell, New York-based investor and political analyst.

Even if the case against Huawei and its executives is legitimate under US law, “it is nonetheless a hideous political mistake,” Mr Karabell says. “If the United States wants to respond to China’s rise and manage the changing role of the United States in the international system, it could hardly have picked a dumber tactic.”

This action will also further alienate the US in the world of global trade, as it was premised on extra-territorial sanctions that the US claims it can use to order other countries to stop trading with third parties – while rejecting international agreements such as the UN Security Council Resolution 2231 that calls on all nations to drop sanctions on Iran.

It appears then, the rules do not apply to the US when it fails to serve Mr Trump, who has thrown the world into calamity while putting American business people at risk of similar arrests when traveling to other nations.

The arrest of Ms Meng “exposes American executives to potential retaliation in China and abroad in a tit-for-tat that will chill an already frosty business climate, with direct effects on the domestic American economy and markets,” investor Zachary Karabell says.

Sachs of Columbia University argues that sanctions on non-national parties should not be enforced by one country alone, but according to agreements reached within the United Nations Security Council.

In rejecting the role of the Security Council and in effect, global order, Mr Sachs argues the Trump administration, “not Huawei or China, is today’s greatest threat to the international rule of law, and therefore to global peace.” The arrest of Ms Meng, says Mr Sachs, is “part of an economic war on China – and a reckless one at that.

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