Trade war fears trigger markets bloodbath

Trade war fears trigger markets bloodbath

The timing of her arrest, coinciding with trade negotiations between U.S. President Donald Trump and Chinese President Xi Jinping, has some observers speculating about a possible political motivation.

Officials for the Canadian and U.S. Justice Departments did not immediately respond to a request for comment.

The Wall Street Journal reported in April that US Department of Justice had opened an investigation into suspected violations of Iran sanctions by Huawei. The ban was sought by Meng, who has a bail hearing Friday, he said.

Chinese Foreign ministry spokesman Geng Shuang told reporters Thursday that the Chinese government also wants Canadian officials to reveal the reasoning.

The Wall Street Journal reported earlier this year that US authorities were investigating whether the Chinese tech giant had violated sanctions on Iran.

The Chinese Embassy in Ottawa said Meng broke no US or Canadian laws and demanded Canada "immediately correct the mistake" and release her. The Shenzhen-based company said it complies with all applicable laws and regulations where it operates "including applicable export control and sanction laws and regulations of the UN, US and European Union".

The arrest and any potential sanctions on the world's second biggest smartphone maker could have major repercussions on the global technology supply chain.

Hong Kong-listed ZTE, which was subject to a United States banning order earlier his year over security fears before that was reduced to a massive fine, was nearly five percent down.

The Israeli actress Gal Gadot also became the company's USA brand ambassador for its Mate 10 Pro smartphone, an announcement that came after AT&T pulled out of a deal to sell Huawei's phones.

Canadian Prime Minister Justin Trudeau has defended the decision by Canadian authorities to execute a U.S. extradition request and detain a Huawei executive.

Ms Meng is the company's chief financial officer and the founder's daughter.

Security concerns recently led BT to bar Huawei equipment from the heart of the 5G network it is rolling out in the UK.

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In that case, Su Bin - a Chinese national who had permanent residency in Canada - was eventually extradited to the USA where he pleaded guilty in 2016 to a criminal conspiracy, years in the making, to steal US military secrets. She is the chief financial officer of Huawei Technologies, a huge telecommunications company.

USA telecommunications firms fear that partnering with Huawei by allowing it to sell their smartphones would anger the federal government and jeopardize future contracts.

Founded in 1987 by Ren Zhengfei, a former People's Liberation Army engineer, Huawei has always enjoyed favorable treatment from a government that - like the US - remains wary of employing too much foreign technology for vital communications.

Canada's top cyber official said the country is prepared for possible retaliation from Beijing for the arrest of Huawei's CFO.

Huawei, for its part, has denied sharing information with the Chinese government, as has ZTE. Meng was detained in Vancouver on 1 December and faces extradition to the U.S. over reported links to sanctions violations.

An anonymous Canadian law-enforcement source told The Globe and Mail that the United States is alleging Meng tried to evade USA sanctions against Iran.

"The Chinese are likely to play tit-for-tat on this one and we should be ready for it", said Fen Hampson, the director of the global security program at the Centre for International Governance Innovation based in southern Ontario.

Meng is a prominent member of Chinese society as deputy chairman of the board and the daughter of company founder Ren Zhengfei.

Likewise, Rod Hunter, an worldwide economic official in former president George W. Bush's White House and a partner at law firm Baker McKenzie, said, "I'm skeptical that the Chinese are going to want to say "uncle".

Arthur Kroeber, founder of Gavekal Dragonomics, said it was unlikely that Beijing would retaliate against the local USA business community, whose interests have partly overlapped with China's in the trade war and been a source of leverage for Beijing.

Donald Trump last month reinstated all the USA sanctions on Iran that had been removed under a 2015 nuclear deal.

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