US-China trade truce on shaky ground as Chinese anger grows

Anger in Beijing over Canada’s arrest of senior Huawei executive Meng Wanzhou is hardening China’s position against the US.

Chinese workers stitch clothes for export to Europe at a textile factory in Hefei, in eastern China’s Anhui province. Picture: AFP

Growing anger in Beijing over Canada’s arrest of senior Huawei executive Meng Wanzhou is hardening China’s position against the US and has eroded the optimism of a week ago that the China-US trade war would end soon.

The rhetoric from Beijing over the arrest has become increasingly angry over the weekend, with China now realising that US President Donald Trump’s goal is not to address specific outstanding trade issues but is part of a much broader attempt to contain its broader rise and influence.

If that is the case, as China is now realising, no amount of goodwill on its side to make trade concessions to the US over the next 90 days will lead to a lasting deal.

The stage is set for a long and bitter cold war into the future between the US and China, which will play out in economic, political and potentially military stages.

Chinese President Xi Jinping’s enthusiastic agreement over a dinner in Argentina a week ago to work with the US on trying to resolve their trade issues over the next 90 days now looks naive, to say the least, given that at the same time as the dinner was taking place Canadian police were following up on a US request to arrest the daughter of one of China’s most prominent businessmen.

China is angry that Canadian Prime Minister Justin Trudeau was advised of the impending ­arrest ahead of time — before the Trump-Xi dinner.

US National Security director John Bolton, who was at the dinner, told National Public Radio that he knew Meng’s arrest was imminent but his office said later that he didn’t know it was about to happen that day, and insisted that Trump didn’t know either.

China’s initial reaction to the arrest has moved from shock and surprise, to an early indication that the arrest was a separate issue to the trade talks with the US, to a new broader anger against the US for extending its views and its laws well beyond its strict territorial boundaries.

The rhetoric from Beijing has ratcheted up to the white-hot comments at the weekend from China’s Deputy Foreign Minister, Le Yucheng, that the arrest of the 46-year-old Meng was a “severe violation” of her rights, which was “unconscionable and vile” and could lead to “grave consequences” for Canada if it did not release her.

In many ways Huawei, based in the former industrial region of Shenzhen in southern China, is one of the poster children for China’s economic and technological success.

Founded in 1987 by former People’s Liberation Army engineer Ren Zhengfei, Huawei has ­become one of the world’s leading suppliers of telecommunications equipment and smartphones and has been at the forefront of investing in the cutting-edge 5G tech­nology.

As the China Daily said in an editorial on Friday, the US is now pressuring its allies, including Australia, not to use Huawei and other Chinese equipment, claiming that using Chinese technology involved cyber risks.

“The US is doing whatever it can to contain Huawei’s expansion in the world, simply because it is the point man for China’s competitive technology companies,” it said.

China called in Canada’s ambassador, John McCallum, at the weekend for a carpeting on Meng’s arrest. China made it clear it could now well take action against Canada for agreeing to the US request for her arrest and ­extradition.

“The US always puts its domestic law above the international one,” Chinese official newsagency Xinhua said yesterday in an opinion piece.

“Its ‘long-arm jurisdiction’ has often drawn criticism from the international community,” it added.

“Yet, despite this, Canada still chooses to ignore the international rules and obey the US, paying the bill for America’s bullying ­actions.”

The opinion piece did not hold back with its attack on Canada, contrasting the country’s much vaunted support for global human rights with its arrest of Meng for unspecified charges as she passed through Vancouver airport, treating her as if she was a “dangerous criminal”.

“We give a piece of advice that Canada should not be wrong-headed any longer but immediately release the senior executive and effectively protect her legitimate rights and interests, otherwise there will be serious consequences and Canada is to take all responsibility,” the Xinhua opinion piece said.

A week ago the US and China held talks that could head off US threats to raise tariffs on almost $US200 billion ($278bn) worth of goods from 10 per cent imposed by the Trump administration to 25 per cent, which was scheduled to take place next month.

As a gesture of goodwill, China had agreed to significantly boost its purchases of American agriculture, energy and industrial goods while also agreeing to discuss other US complaints, including the protection of intellectual property and cyber security.

But Meng’s arrest, which apparently stems from US Justice Department investigations going back to 2016 at least, makes it difficult for China to think the US had come to the table with intentions to do anything but to contain its economic rise.

Given Australia’s involvement in the Five Eyes intelligence sharing agreement between the US, Britain, Canada and New Zealand — and the objections to the use of Chinese technology being raised on security grounds — it is highly likely that Australia will continue to be drawn into the US-led technological cold war.

In a high-level meeting in Beijing on Friday with China’s top diplomat, politburo member Yang Jiechi, former prime minister John Howard moved to smooth over political tensions with China using positive words about the importance of China to the Australian economy and the role of 1.2 million people in Australia of Chinese descent.

“The economic part of our relationship is very strong,” Howard said.

“China is our major export destination and the Chinese market was very critical for Australia during the global financial crisis.

“It was one of the reasons why the GFC left our country relatively unscathed.”

Howard said both sides had agreed during the talks that there would inevitably be differences between Australia and China.

“Like all close relationships, you have to keep your friendships in good repair,” he said.

He said the two sides had talked about how they would handle ­future differences that would inevitably arise in the future.

How that relationship plays into an increasingly bitter US-China relationship remains to be seen.

The weekend’s angry comments from Beijing have ensured that no end to the trade war between US and China is in sight and relationships could deteriorate as Beijing has a new wariness about Washington’s real intentions.