Wednesday, 12 Dec 2018

China protests 'despicable hooliganism' after arrest of Huawei executive

China called Thursday for the immediate release of a top executive at Huawei Technologies, the world's largest maker of telecommunications network equipment, amidst the fears that it could have in China.

Meng Wanzhou, Huawei's chief financial officer and the daughter of Huawei's founder, is set to appear in court on Friday.

Meng was arrested on a U.S. request because Huawei is suspected of trying to evade American sanctions on Iran, according to multiple news reports. U.S. prosecutors have been investigating since 2016 whether Huawei violated U.S. export and sanctions laws by shipping U.S.-origin products to Iran.

The arrest, made on the same day as President Trump and China's Xi Jinping in the United States of America to negotiate a way out of their trade war, is being viewed in China as politically motivated.

The United States is "resorting to despicable hooliganism," the nationalist Global Times wrote in an editorial published Thursday. "Anybody can see that the United States is maliciously picking holes in Huawei," said the paper, "which often reflects the ruling Communist Party.

The "persecution" of Huawei is "clearly against the spirit of the consensus" forged between Trump and Xi, it said. The two sides are now entering the world of trump.

The arrests added to trade jitters that dragged down world markets in the past week. Major exchanges in Asia and Europe slumped sharply Thursday, and Wall Street plunged at the opening bell.

American analysts also were surprised at Meng's arrest.

"My jaw dropped when I saw this news," said James McGregor, chairman of the greater China region for APCO Worldwide, a business consultancy. "This is so different from anything we've seen before. Serious legal action taken with political timing. "

The Ministry of Commerce is trying to get rid of the trade talks. "The China and U.S. trade teams are now in smooth communication and good cooperation," spokesman Gao Feng said. "We are full of confidence that China and the US can reach an agreement within 90 days."

But over the Ministry of Foreign Affairs, spokesman Geng Shuang said the Chinese government has made "stern" and "solemn" representations to both the United States and Canada over Meng's arrest.

"Geng said," We have asked them to clarify the grounds for detention, to release the detainee and earnestly claim the rights of the person concerned.

The investigation into Huawei appears similar to a previous case against ZTE Corp., another Chinese telecommunication equipment company, which pleaded guilty last year to violating U.S. export sanctions on Iran.

ZTE was initially blacklisted in the United States, a move that brought it to the brink of bankruptcy. But after Trump's intervention, that was downgraded to a $ 892 million fine and outside monitoring of its business activities.

But no one has been arrested or arrested in the ZTE case, and Huawei has not been formally charged with breaching the penalties.

Huawei has come to symbolize the potential and the threat of a rising China. It has quickly become one of the pillars of the new, high-tech economy champion by Xi, who has ambitions for China to become the world's leader in high-tech manufacturing.

Huawei employees 180,000 people in some 170 countries and earned $ 92.5 billion last year. It is the world's third-largest seller of smartphones, after Apple and Samsung, and expects to sell 200 million handsets this year.

But the Shenzhen-based company has also become synonymous with a darker side of China's rise, founded on suspicions that it has links to the Chinese military or security services.

The United States, Britain, Australia and New Zealand – The Five Eyes Intelligence-sharing network, the other being Canada – Huawei

The suspicions about the fact that they were founded in the United States, which was founded by a 20-year-old woman in the People's Liberation Army, reportedly serving a military technology division.

Some analysts questioned the timing of the arrest, if not the substance.

"There may be a legal basis for this, but politically, the timing is corrosive," said James Zimmerman, a former head of the American Chamber of Commerce in China. "We're in the middle of a very sensitive, tense negotiations, and they're doing something that's unprecedented in the decades of U.S.-China relations."

In the past, China has been retaliated swiftly against similar types of actions. The question is now Beijing will react this time and risk sparking a new battle in the trade war.

"I've never seen China," said McGregor, who has lived in China for nearly three decades. "For now, China seems to be taking a measured approach. But this could get ugly very quickly. "

Yang Liu and Lyric Li contributed to this report.

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