Warning of China retaliation over Huawei arrest

US tech executives have been warned to delay travel to China after Beijing’s angry reaction to the arrest of Huawei’s CFO.

Meng Wanzhou, Huawei’s CFO, is facing extradition to the US.

US technology executives have been warned to delay travel to China in the wake of the weekend arrest of Huawei’s chief financial officer Meng Wanzhou, as concerns rise about Chinese reaction to the move which could see her sent to the US to face charges.

“If I were a US tech executive I would delay travel to China or go on a vacation if I was based there,” US-based China watcher, Bill Bishop, the editor of the influential newsletter Sinocism said.

Mr Bishop said there had been speculation in the US that China would retaliate against the arrest of Ms Meng - the daughter of Huawei founder Ren Zhengfei and vice chairman of the company - by arresting a US executive.

Hu Xijin, the editor of China’s nationalistic newspaper The Global Times, described the arrest in Canada as a “declaration of war” against China, as anger in the country grows over the move.

While no details of any prospective charges have been released, it is widely speculated that the US Justice Department has asked for her extradition for allegedly violating sanctions against Iran.

“I am not sure that Beijing would do that (arrest a US executive) without a very clear legal case as it would undermine the massive propaganda campaign the party has undertaken to portray China as the defender of the global trading system,” Mr Bishop wrote in his latest newsletter.

But he advised US technology executives to reconsider any immediate plans to travel to China.

China has reacted angrily over the arrest, which has come at a critical time for talks to end the trade war between the US and China.

While China has agreed to step up purchases of US goods and consider other moves to redress its trade imbalance, no details have been released despite President Donald Trump’s

announcement on Twitter that China would be dropping its tariffs on the import of US cars.

China’s Ministry of Foreign Affairs has demanded Ms Meng’s immediate release and an explanation for the arrest.

“The Chinese side has lodged stern representations with and made clear its stern position to the Canadian side and the US side respectively on this,” China’s Ministry of Foreign Affairs spokesman Geng Shuang said last night.

He said China had demanded immediate clarification of the reason for her detention, and to “earnestly protect the legal and legitimate rights of the person involved”.

Mr Geng rejected suggestions that the arrest could affect the discussions on the trade truce agreed between Mr Trump and China’s President Xi Jinping at the G20 on the weekend.

“China and the US should follow the consensus reached by the two heads of state to step up consultations and reach a mutually beneficial agreement at an early date.”

Under the deal agreed on the weekend, the US has agreed to hold off further increases the tariffs on some $US200 billion worth of Chinese exports to the US which were due to take place in January, pending 90 days of talks over ways to boost sales of US goods to China and

agreements by China to take steps to protect intellectual property and prevent cyber hacking.

But the arrest of the senior Huawei executive, a daughter of a prominent businessman in China has severely damaged the atmosphere of goodwill which came from the first news of the weekend deal amid growing concerns on world stock markets of a resumption of tensions between the US and China.

There is speculation over whether President Trump knew of the arrest before he had dinner with President Xi on Saturday night and whether the US will use the arrest as a bargaining chip in the negotiations to put pressure on Beijing.

Donald Trump and Xi Jinping meet for dinner in Buenos Aires. Pic: AFP

The arrest of the Huawei executive, which comes amid moves by countries such as Australia, New Zealand and the US to ban or restrict the use of its technology, particularly in the upcoming 5G network, is now creating a global technology divide between the US and its allies and China.

While Huawei has been active in Australia and the UK in supplying the 3G and 4G networks, this year’s decisions by Australia and New Zealand to ban it from their 5G networks and other moves in Britain and the US to curtail its role will now make Western executives concerned about using Chinese telecommunications technology.

“Any foreign and especially US technology firm that has supply chain reliance on China needs to be deep into planning for reducing that reliance, no matter how hard, painful and expensive such a shift would be,” Mr Bishop wrote in his newsletter overnight.

“Boards of directors of those companies are negligent at this point if they are not pushing the company to do this planning,” he said.