ALL SECTIONS
Your Investment News From China to Wall Street

China Calls for Release of Huawei Official After Canada Arrest; Stocks Open Lower on Trade Tension

Wanzhou Meng was arrested in Vancouver on the same day that U.S. President Donald Trump and Chinese leader Xi Jinping were negotiating a trade cease-fire.

Anna Vodopyanova
    Dec 06, 2018 10:22 AM  PT
China Calls for Release of Huawei Official After Canada Arrest; Stocks Open Lower on Trade Tension

With a trade cease-fire between China and the United States under threat, outraged Beijing officials on Thursday called for the immediate release of a top executive of Huawei Technologies Ltd. after her arrest in Canada.

"We have asked them to clarify the grounds for the detention, to release the detainee and earnestly safeguard the legal and legitimate rights and interests of the person involved," a spokesman at China's Ministry of Foreign Affairs, Shuang Geng, said after Wanzhou Meng, Huawei's chief financial officer and the daughter of its founder was arrested at the request of U.S. law enforcement.

The scandal erupted Wednesday after news reports disclosed that Meng was held by law enforcement officials as she was transferring flights in Vancouver on Dec. 1, the day that U.S. President Donald Trump and his counterpart, Xi Jinping, sat to negotiate on trade in Buenos Aires.

Weng was arrested as part of a U.S. investigation into an alleged scheme to use the global banking system to evade U.S. sanctions against Iran, according to Reuters, citing unnamed sources. The U.S. has been looking into whether Huawei violated U.S. sanctions against Iran since at least 2016 and more recently the company's use of HSBC Holdings Plc to make illegal transactions involving Iran, the news agency reported.

The action also roiled the stock market this morning, which reopened after being closed yesterday in observance of an official day of mourning for former president George H.W. Bush. In New York, the Dow Jones Industrial Average and S&P 500 Index were down nearly 2 percent in early afternoon trading, while the Nasdaq composite was off 1 percent. 

Huawei, one of China's largest telecoms equipment makers, has been long scrutinized by Washington for its alleged ties to the government.

The current action stems from concerns of U.S. officials who suspect the company has shipped U.S.-made products to Iran, thus violating U.S. sanctions, according to multiple news reports.

Meng is awaiting a bail hearing on Friday to determine if she is set to be extradited to the U.S. She faces unspecified charges in the Eastern District of New York, as reported by CNN and The Washington Post.

U.S. Senator Ben Sasse praised the action on Wednesday, saying that it was "for breaking U.S. sanctions against Iran." He added: "Sometimes Chinese aggression is explicitly state-sponsored and sometimes it's laundered through many of Beijing's so-called 'private' sector entities."

China, in response, was outraged by the move. The nationalist daily newspaper Global Times wrote the U.S. was "resorting to despicable hooliganism."

"Anybody can see that the United States is maliciously picking holes in Huawei, trying to give it a hard time using the American legal system," the editorial stated.

If the action proceeds, it would be another in a series of crackdowns by Washington this year on major Chinese tech companies dealing with U.S. technology suppliers. Huawei's main rival, ZTE Corp., as well as Fujian Jinhua Integrated Circuit Co. Ltd., both faced restrictions on acquiring components, software, and technology goods from the U.S., the former for violating the embargo with Iran, and the latter for alleged theft of intellectual property.

The move on Huawei, which has been banned from use by the U.S. government and its contractors, as well as pushed out of some deals in the U.S. market, re-intensified the tension between the world's two largest economies despite the decision to halt tariffs on trade reached over the weekend in Argentina.

Feng Gao, the spokesman at China's Ministry of Commerce, expressed hopes for a trade deal Thursday despite Meng's arrest, as reported by The Post.

"The China and U.S. trade teams are now in smooth communication and good cooperation," Gao said. "We are full of confidence that China and the U.S. can reach an agreement within 90 days."

MOST VIEWED
YOU MAY LIKE