Top technology executives from the United States and China are fearful of the consequences of Huawei CFO’s recent arrest in Vancouver, new reports indicate. American networking juggernaut Cisco Systems is understood to have warned employees of going to China on non-essential trips until the current situation is resolved, specifically citing the ordeal as the reason for the recommendation. In a subsequent statement provided to media outlets, the San Jose, California-based firm described the communication as an error, claiming its management isn’t officially looking to prevent employees from traveling to the Far Eastern country.
No one is safe
Huawei Chief Financial Officer arrested in Canada is none other than Meng Wanzhou, a 46-year-old that’s been with the firm since its startup days in 1993. She’s also the daughter of the company’s founder Ren Zhengfei and one of the conglomerate’s most high-profile figures, with her detainment indicating no one is safe from the U.S. judicial system when it comes to allegations of broken trade sanctions. The Department of Justice suspects Ms. Meng of an illegal scheme involving banking activity and secret ties with Skycom, a Hong Kong-based firm operating in Iran. She’s alleged to have used those connections to violate trade sanctions the Commerce Department imposed on Iran. Not many details on the case are currently public knowledge, especially as Ms. Meng already won a publication ban in Canada, dealing a major blow to the media’s ability to uncover and report details about the case.
The Canadian government is now representing the Commerce Department in the ongoing extradition trial which started on Friday. While the plaintiff opposed the idea of granting bail to Ms. Meng, arguing she’s a flight risk, a Vancouver court allowed her to exit jail in exchange for a $10-million CAD ($7.5-million USD) deposit. Her freedom is still heavily restricted as she’s under a limited house arrest while wearing a tracking ankle bracelet and has had her passport taken. One of Ms. Meng’s attorneys recently argued she would never dishonor her father by opposing a court order, i.e. flee the country. The extradition process may take up to several months to be concluded, assuming both sides exhaust all of their legal remedies.
U.S.-China tensions reaching unprecedented heights
The Chinese government labeled the executive’s arrest as a politically motivated move made in bad faith, demanding to see evidence of any wrongdoing of Ms. Meng’s part. Huawei itself also said it wasn’t aware of any transgressions conducted by its executive, reiterating calls for her immediate release. State-sponsored media in China is presently pushing a narrative of the ordeal being a coordinated attempt to stifle Huawei’s growing global presence motivated by fear of its rising technological prowess. Huawei has been making similar arguments in the past when pressed on its close ties with the communist regime that go all the way to its founder who was an engineer and official of the People’s Liberation Army before founding what’s now the largest manufacturer of networking gear in the world.
The White House already denied having any direct knowledge of the Justice Department’s plan to request Ms. Meng’s arrest, with the same sentiment being echoed by the top of the Trudeau administration. The arrest itself was made during the latest G20 summit in Argentina where President Trump and President Xi Jinping agreed to a 90-day truce in their ongoing trade war. Several reports suggested the Justice Department consciously didn’t brief the President on the arrest plan so as to avoid jeopardizing the talks, though that’s exactly what the Chinese side claims already happened. Most signs are now indicative of the trade war continuing early next year as both countries keep insisting the other side is trying to force an unfair deal.
But U.S. troubles are nothing new for Huawei
Huawei has been at odds with the American government for the entirety of the current century and also clashed with privately held companies in the U.S. on numerous occasions, with those conflicts including episodes with the likes of Cisco and T-Mobile, both of whom accused the Chinese OEM of trade secret theft. And while Cisco settled with basically no concessions, T-Mobile won its lawsuit against the company earlier this year, albeit it wasn’t able to prove corporate intent on Huawei’s part and “only” won several million dollars due to the fact Huawei’s engineers sketched and stole parts of its user experience testing robot “Tappy.” That history of issues is what kept many American companies from collaborating with Huawei in the past and the U.S. government’s renewed interest in the Chinese electronics giant continues to do so to date.
Ms. Meng’s arrest prompted a strong response from users of Chinese social media, with many of them calling for Beijing to respond with identical measures and detain someone of Satya Nadella or Tim Cook’s profile, according to an investigation performed by AndroidHeadlines. The Chinese government already summoned U.S. ambassador in order to register an official complaint regarding the development, which remains its most high-profile act of opposition to the executive’s arrest to date. Industry analysts are now fearing a massive blow to the global economy, with Huawei’s stock already dropping following the ordeal, together with the shares of its major suppliers which are largely reliant on its business but also cooperate with many other manufacturers across a variety of industries.
The U.S. is currently also pressuring its allies to ban Huawei from contributing to their incoming deployment of the fifth-generation of mobile networks, citing security concerns. 5G technologies are expected to enable many new solutions, create jobs, and consequently boost the global economy, though their guaranteed prevalence would also make them the perfect solution for spying in the wrong hands, much like the Western intelligence community argued on numerous occasions. Australia already followed the U.S. example and prevented Huawei from joining its 5G race, with the likes of Japan, Belgium, and South Korea reportedly considering a similar course of action. How Ms. Meng’s legal process affects the current geopolitical situation remains to be seen, though any potential consequences of the thereof will largely depend on whether the Justice Department manages to extradite her.