Huawei arrest: dramatic course as food was served at G20

As Donald Trump and Xi Jinping sat down to a G20 dinner, Huawei scion Meng Wanzhou was being detained at Vancouver airport.

Arrested: Meng Wanzhou, the 41-year-old daughter of the founder of telecommunications giant Huawei. Picture: Reuters

As US President Donald Trump and Chinese counterpart Xi Jinping were sitting down to a dinner of Argentinian steak and wine at a Buenos Aires hotel on Saturday, Meng Wanzhou, the 41-year-old daughter of the founder of telecommunications giant Huawei, was being detained at Vancouver airport.

Meng, Huawei’s chief financial officer, was arrested in transit at the request of the US Justice Department on suspicion of violating US sanctions against Iran.

At least one person at the ­Buenos Aires dinner was aware of what was about to go down — Trump national security adviser John Bolton yesterday confirmed he had been told in advance.

Meng had been seen as heir ­apparent at the Shenzhen telecommunications company founded by her father, Ren Zhengfei.

An active executive in the company for the 20 years, Meng is also deputy chairman of Huawei, which has been a supplier for more than a decade to Optus and Vodafone in Australia and British telecommunications giant BT.

At the dinner, Xi was deep in discussions about a possible trade deal to hold off Trump’s threatened tariff increases on $US200 billion worth of Chinese imports that had been set to go live in January.

While the truce has been portrayed in China as a breakthrough, it came only as a result of an agreement by Xi to significantly step up Chinese purchases of US goods and to go some way towards answering Trump’s complaints about Chinese theft of intellectual property and hacking.

Had Xi known of the arrest of the daughter of one of China’s most prominent businessmen, there would have been a very different atmosphere in the room.

The rare arrest of a senior Chinese business leader in the West for alleged corporate misbehaviour is likely to intensify a technological Cold War that has seen Western nations shunning equipment — often cheaper and more advanced — because of security concerns.

Regardless of the success of the charges laid against Meng when she is extradited to the US, her shock arrest will be a major setback for Huawei, the company founded in 1987 when her father was a senior engineer with the People’s Liberation Army.

The head of Britain’s MI6, Alex Younger, said this week the British government should question ­Huawei’s involvement in the rollout of 5G services given moves by the UK’s allies to ban the ­company.

In August, the Trump administration banned Huawei and fellow Chinese tech giant ZTE from ­supplying equipment to the US government.

Britain’s BT, which has been a long-time user of Huawei equipment, said it would not be using the Chinese company’s technology in its 5G network and would be removing its equipment from much of its 4G network.

And in Tokyo yesterday there were reports the Japanese government was also considering new guidelines to ban Chinese equipment from its 5G network.

The oldest child of Ren Zhengfei, Meng joined the family company more than 20 years ago. Her younger half-sister is studying at Harvard University.

Meng worked at various positions in the company before doing a masters degree at Huazhong University of Science and Technology in Wuhan, after which she joined the company’s finance ­department.

Her arrest was followed by a damaging story leaked to the South China Morning Post that reported Meng had told employees during an internal briefing in Oct­ober, with her father present, that there were some scenarios in which a company had to weigh up the costs and accept the risk of not adhering to corporate rules.

In a leaked memo, she was quoted as saying there were different types of external regulatory compliance facing a company, ­dividing them into “red” and “yellow” lines.

The leaked document said both Meng and her father told the staff question-and-answer session that the company wanted to limit the cost of compliance and did not want to exceed what was legally required in each jurisdiction.

The worldwide stockmarket euphoria that greeted the news of the Trump-Xi deal on Monday was already cooling when the news of the arrest broke on Thursday morning, Australian time.

A week after the dinner in ­Argentina, Meng’s arrest has brought a new atmosphere of suspicion and mistrust in China about the motives of the Trump administration and whether it is serious about striking a deal on trade.

Meanwhile, Meng remains in a Canadian jail.

She was hoping to apply for bail overnight while Canadian authorities worked on her extradition.

US-based China watcher Bill Bishop yesterday warned that US telecommunications executives should postpone any trips to China and suggested that those currently in the country should consider ­getting out.

Writing in his widely read newsletter Sinocism, he said there were rumours in the US that China could retaliate by arresting a US executive visiting China.

While he rejected the idea, he suggested that US executives should be cautious about visiting in the current increasingly tense atmosphere.

In China, rumours have been sweeping social media that her ­arrest may have been linked with the death on Saturday of 55-year-old Chinese-American scientist and venture capitalist Zhang Shoucheng, who had been suffering from depression.

Suggestions were that Zhang, a Stanford professor, may have known about US Justice Department investigations into Huawei and other companies that have been under way for some time, ­although his family issued a statement yesterday rejecting the speculation.

Meng’s arrest has capped off a nightmare week for Huawei, which is a leading face of China’s recent global technological ­success.

In arresting Meng, the US has struck at the heart of China’s ­leading-edge technology — technology that Trump alleges has been partly built on know-how taken from US companies.

An editorial in The China Daily yesterday argued that “the US is trying to do whatever it can to contain Huawei’s expansion in the world, simply because the ­company is the point man for China’s competitive technology companies”.

It argued that moves by US ­allies such as Australia and New Zealand in banning the company from supplying equipment for 5G networks were a result of pressure from the US.

“Such pressure from the US has made it very difficult for some governments and companies to make a decision on their co-operation with Huawei,” it said.

“What is badly needed for the development of US-China ties is political trust. Yet Washington, in persuading its allies to shun co-­operation with Huawei, has helped erode that political trust.”

Whatever happens to Meng, her arrest has meant there is a new Cold War between China on the one side, and the US on the other, which will inevitably draw Australia in.