The arrest of a top Chinese technology executive by Canadian authorities acting at the behest of the United States is threatening to upend the Trump administration’s efforts to sustain a trade truce with China.
The arrest of Sabrina Meng, the chief financial officer of China’s largest mobile phone marker, has been condemned by Chinese officials, who are calling for her immediate release. The U.S. has reportedly requested Meng be extradited to New York, where she would reportedly face federal charges of violating Iran sanctions.
Hu Xijin, the editor in chief of the Global Times, described the arrest as a “declaration of war” against China, according to the New York Times. The Global Times is a state-run newspaper whose views are thought to reflect the ruling communist party in China. Hu’s comments were made on Weibo, a Twitter-like service, the New York Times reported.
“Without any solid evidence, the Canadian and US governments trampled on international law by basically ‘kidnapping’ Chinese citizen Meng,” an official with the Chinese Ministry of Commerce said in a Global Times op-ed. “The China-US trade row could become a protracted war.”
The Global TImes also reported, in a news story, that Chinese experts view the arrest as an intentional effort to “heat up the ongoing trade war.”
Although Meng and Huawei are not well-known in the U.S., the executive and her company are extremely high profile in China. Precise analogies are hard to come by but U.S. observers are making comparisons to well-known American executives.
“This is like China arresting Steve Jobs’ son,” Art Cashin said on CNBC.
Others have compared it to China arresting Sheryl Sandberg, the chief operating officer of Facebook.
Meng is the daughter of the company’s founder, Ren Zhengfei, and has recently become his presumed successor. Ren is a former Chinese military official who founded the company more than 30 years ago. It has become China’s premier global brand and it central to its “Made in China 2025” plan to dominate high-tech manufacturing. The company has been making a push to become the world leader in 5G technology and met with strong resistance from U.S. officials.
It is not clear whether President Donald Trump knew about the arrest in advance. The arrest was reportedly made on the same day that Trump and senior members of his administration were having dinner with their Chinese counterparts in Buenos Aires. After the dinner, the two nations announced they would pause any escalation of tariffs and resume trade negotiations for 90 days.
A source familiar with Justice Department procedures said it is unlikely the U.S. attorneys would have acted without consulting other agencies in pursuing the international arrest. U.S. national Security officials were aware of the arrest prior to the news breaking Wednesday evening, a different source said. It was not clear if they were aware of the arrest beforehand, however.
When the Trump administration blocked the merger of Qualcomm and Broadcom it singled out the risk that the deal would give Huawei an advantage in developing 5G technology.
Bloomberg quoted an analyst in China who sees the arrest as the result of the national security White House staff pushing back against the Wall Street-friendly China doves in the White House, led by Treasury Secretary Steven Mnuchin, who pushed for the trade truce.
“Their goal is to decouple with China,” said Wang Yong, a professor at the School of International Studies at Peking University. “Negotiations are the wish of Trump and Wall Street.”