China Demands Release of Top Huawei Executive Held in Canada

RFA
07 Dec 2018, 05:43 GMT+10

China on Thursday demanded that the Canadian authorities release a top executive at its telecoms giant Huawei Technologies, who was detained while transiting through the country.

Meng Wanzhou, the firm's chief financial officer, was detained in Vancouver on Saturday, on suspicion of evading U.S. trade sanctions with Iran, and could face extradition to the United States.

Her arrest at Washington's request comes amid a cease-fire in a tariff war between the U.S. and China.

"We have made solemn representations to Canada and the U.S., demanding that both parties immediately clarify the reasons for the detention, and immediately release the detainee to protect the person's legal rights," foreign ministry spokesman Geng Shuang told a regular news briefing in Beijing on Thursday.

Meng was detained in Vancouver on Saturday, the day President Donald Trump met with his Chinese counterpart Xi Jinping in Argentina.

An employee who answered the phone at Huawei's headquarters in the southern Chinese city of Shenzhen declined to comment, saying they were unaware of the specifics of the situation.

The Chinese embassy in Ottawa said: "China objects and protests in the strongest terms to the detention, at the request of the United States, of a Chinese citizen who has broken no U.S. or Canadian laws."

China is making serious representations to Washington, calling on the authorities to "correct their error and give Ms. Meng back her freedom," it said in a statement.

"China is following the situation closely, and will take all measures necessary to firmly uphold the rights and interests of Chinese citizens," it said.

Link to sanctions violations

Meng, 46, the daughter of Huawei's founder Ren Zhengfei, uses her mother's surname and has used the English names "Cathy" and "Sabrina."

Her arrest is linked to Huawei Technologies' alleged violation of U.S. sanctions on Iran, Reuters cited a source as saying. Chinese telecoms equipment maker ZTE was hit with U.S. export restrictions earlier this year after similar allegations were made.

Shenzhen-based lawyer Wei Shuizhun said the incident has people "glued to their screens," amid widespread speculation over Meng's fate.

"In my circle, the view is that if this was just about a private company going about its legitimate business, then the U.S. justice system should clear [Meng]," Wei said. "But Huawei flies under a private sector flag, and yet it has done a lot of things to represent and assist the Chinese government."

"But most ordinary people here probably don't see it like that, and just think the U.S. can't give up its imperialist mentality," he said.

Sun Ming-te, who directs the Macroeconomic Forecasting Center at the Taiwan Institute of Economic Research, said Meng's arrest, in the context of the ongoing trade war with Beijing, could be seen as a bid to contain China's technological development.

"After the tariff war, the trade war could expand to exchange rates ... or disputes at the World Trade Organization, with the main point being to attack technological development in mainland China, in particular, its flagship companies," Sun told RFA.

Widening market, security concerns

Pi Chung-ho, who heads the Chinese-language digital magazine Defense Technology Monthly, said there is growing concern over Huawei's widening market penetration outside China, as the company has already been the subject of security concerns in the United States.

"Huawei's not just a regular company: it has already improved standards of future network architecture beyond the standards previously set by Qualcomm," Pi said. "This is a potential crisis for politicians with an eye to the future."

"If the future is based on Huawei's standards, then ... this is bound to put China in a dominant position, but this carries various levels of threat for the U.S. economy, as well as political and military threats," he said.

Chiu Shih-fang, analyst at the Taiwan Institute of Economic Research, said the move will likely be a huge blow to Huawei's plans for global expansion.

"It is looking right now as if there will a certain level of impact," Chiu told RFA. "The three major South Korean telecoms firms are engaged in bidding to supply 5G equipment right now, and Huawei hasn't been invited [to tender]."

"Australia won't use [Huawei products], and ... Japan is taking a conservative attitude right now, so it looks as if Huawei won't be able to win too much market share when it comes to 5G equipment," Chiu said.

Overseas revenue

Huawei employs more than 180,000 staff and reported a revenue of U.S.$93 billion in 2017. The privately held company started off selling digital telephone switches in the 1990s, before winning its first big overseas contract from Hong Kong's Hutchison-Whampoa in 1996.

It now makes as much revenue overseas as it does in China, largely from the sale of equipment to telecoms companies around the world, according to its 2017 annual report.

Huawei's smartphones also now compete with those of Apple and Samsung in a highly competitive market.

Reported by Wong Siu-san and Sing Man for RFA's Cantonese Service, and by Jing Yuan, Gao Feng and Hwang Chun-mei for the Mandarin Service. Translated and edited by Luisetta Mudie.