Canada defends Huawei arrest as markets wobble

Virginia Carson
December 7, 2018

MarketWatch Tech Editor Jeremy Owens on the fallout from the arrest of Huawei CFO Meng Wanzhou.

The ministry said the US is seeking her extradition and she faces a bail hearing today, adding that it could not provide further details due to a publication ban that was sought by Meng, whose father, Ren Zhengfei (任正非), is a former Chinese People's Liberation Army engineer.

"We were advised by them with a few days' notice that this was in the works but of course there was no engagement or involvement in the political level in this decision because we respect the independence of our judicial processes", he said Thursday.

Meng was arrested in the western city of Vancouver on December 1, Canada's ministry of justice said in a statement on Wednesday, prompting China's embassy to say it had "seriously harmed the human rights of the victim".

Chinese Foreign ministry spokesman Geng Shuang told reporters Thursday that the Chinese government also wants Canadian officials to reveal the reasoning.

It's particularly worth noting that Meng was arrested on the same day that U.S. President Donald Trump and his Chinese counterpart Xi Jinping held a significant bilateral meeting in Buenos Aires, Argentina.

Huawei said in a statement Wednesday it has not been provided many details about Meng's arrest.

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Without providing any further detail, Bolton said that Huawei is a company that USA officials have been concerned about for a number of reasons.

Huawei declined to comment, but said in a statement after the arrest that it complies with all applicable export control and sanctions laws and other regulations.

Huawei has clarified from their end that she faces unspecified charges in the NY. In April, China appealed to the avoid damaging business confidence after The Wall Street Journal reported Washington was investigating whether Huawei had violated sanctions on Iran.

It surpassed Apple in smartphone sales in the second quarter of this year, leaving it behind only market leader Samsung.

Huawei was a pioneering supplier of telecom gear at a time when China was spending heavily to upgrade its networks, importing much of its equipment. Chinese technology has been a particular bugbear for the USA president, who has justified imposing tariffs on Chinese imports with allegations of intellectual property theft by Chinese 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. Mark Warner, D-Va., and Marco Rubio, R-Fla., wrote in October to Canadian Prime Minister Justin Trudeau.

The arrest was made at Washington's request as part of a USA investigation of an alleged scheme to use the global banking system to evade US sanctions against Iran, according to people familiar with the probe.

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China has condemned the arrest. Such requests must be made through the U.S. Department of Justice's Office of International Affairs (OIA).

Huawei is one of the largest tech companies in the world, but it has been under pressure in nations like the USA, U.K., and Australia for allegedly doing the bidding of the Chinese government. "Certainly other governments also have an equal reason to be mindful and concerned about the espionage intention and capabilities of the west".

Nevertheless, Huawei is allowed to operate in Canada and in a September interview with the Globe and Mail, Scott Jones, head of Canadian Centre for Cyber Security, said Ottawa is confident sufficient safeguards exist to deal with the risks of telecommunications hacking or spying by China.

"There is ample evidence to suggest that no major Chinese company is independent of the Chinese government and Communist Party - and Huawei, which China's government and military tout as a 'national champion, ' is no exception", he said "It has been clear for some time that Huawei, like ZTE, poses a threat to our national security".

The Global Times said in a separate editorial on Friday: "We believe that the U.S. government, like China, is willing to end the trade war".

Surprising as the move was, US officials have made little secret of their dissatisfaction with Huawei. The US later replaced the ban with a fine and governance changes.

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