At the very time when President Donald Trump was dining with President Xi Jin Ping in Buenos Aires after declaring a 90 day truce in the ongoing trade war, the Canadian police took into custody a young and powerful Chinese woman executive of the Chinese technology giant, Huawei at the request of the US authorities.
The arrest of Huawei Chief Financial Officer Meng Wanzhou, 46, the daughter of Huawei’s founder in Canada has dimensions beyond trade, Iran sanctions and the suspension of trade war between the US and China.
It is part of the current battle between the two countries for technological domination of the world and US anxiety about its national security caused by the infinite capacity for spying that the technological company has acquired around the globe.
Therefore, the arrest will have far reaching repercussions, which would affect U.S.-China relations and cause a potential backlash against American firms operating in China.
The US and several western states have already taken measures against the dramatic rise of Huawei.
The increased sales of smartphones came despite political hostility towards the brand in some parts of the world, especially the US. There, no carriers support Huawei and so they are not widely marketed.
But it is in telecoms network equipment, which forms the largest part of Huawei's business, that Washington has been countering. The US has banned the use of Huawei equipment in communications networks, warning of security risks and has called for other governments to follow suit. Nevertheless, in all parts of the world, even in the Americas, the market for Huawei products has grown over the past three years.
The initial reports indicated that Meng appeared in a Vancouver court for a bail hearing as she awaits possible extradition to the United States in the investigation of whether Huawei violated U.S. sanctions against Iran.
But no clear charges have been made against her and President Trump has tweeted that “China talks are going well.” A US official expressed confidence that Meng’s arrest would not spill over into the talks with China aimed at increasing Beijing’s purchases of U.S. farm and energy commodities, lowering Chinese tariffs and making sweeping changes to China’s policies on intellectual property and technology transfers.
Despite the flutter that the arrest caused in the stock market, the US authorities insisted that the question whether Huawei violated US sanctions against Iran was on a separate track and that the timing of the arrest was a coincidence, suggesting that Huawei was at the centre of an investigation for endangering state security.
They went on to say that the arrest was the result of “the bad actions of Huawei,” adding there was a “frightening” risk that the Chinese government could use the company’s products for spying.“The timing was unusual, but the actions were legitimate.”
In other words, the US does not want Meng’s arrest to affect the current trade talks. Its concerns on account of Huawei’s rapid expansion around the globe, its lack of transparency, the role of the Chinese deep state in it and the likelihood of China assuming leadership of technology are not new.
The claim that the arrest took place in the middle of the trade talks purely by coincidence may well be true. But insulating the arrest from the current negotiations will not be feasible, given the importance China attaches to Huawei.
The founder of Huawei was once an engineer in the People’s Liberation Army and a member of the Communist Party. His meteoric rise was not without the connivance of the state. To the Chinese, telecom is as important as the military and they are eyeing the ownership of 5G technology very soon.
Canada has been literally caught between the devil and the deep sea. Meng was once a resident of Canada. Justin Trudeau refused to comment on the case because it was in the court, but observed in this context that Canada has a strong and constructive relationship with China.
Canada would be happy to have her out of the country soonest, but since the charges have not been framed, it could take long for the verdict about her bail or extradition to come. The Chinese have put the onus on Canada and demanded the immediate release of Meng as her arrest while she was changing planes in Vancouver was a serious breach of her rights. It "ignored the law" and was "unreasonable", said the Chinese Foreign Office. “Canada must accept full responsibility for the serious consequences caused," the statement added.
Huawei is very much present in India through its subsidiaries. It will begin manufacturing mobile phones in India from next year as it plans to open 1,000 company-branded stores across the country.
“We look at India strategically and now intend to grow our presence through launch of devices in the mid- and premium-end of the market,” said Huawei. The company is selling in India through its sub-brand Honor, which is sold through the online channels. Huawei’s compatriots such as Xiaomi, Vivo, Oppo and OnePlus are also selling in India, and have been making the products in the country to have a price-competitive edge. Xiaomi, which currently is the largest smartphone maker in India ahead of Samsung, buys devices from the factories of Taiwanese contract manufacturer Foxconn’s India units.
India may not take sides in the US-China dispute over Huawei, but we should not close our eyes to the fears that the company has caused worldwide. Apart from the fear of spying, which is real, the need for balancing trade alone is a reason for restraining Huawei in India.