Huawei CFO arrest outrages China and rattles markets

People walk past a Huawei retail shop in Beijing Thursday Dec. 6 2018. China on Thursday demanded Canada release a Huawei Technologies executive who

People walk past a Huawei retail shop in Beijing Thursday Dec. 6 2018. China on Thursday demanded Canada release a Huawei Technologies executive who

Meng's arrest came at the behest of USA authorities and is connected to an investigation into alleged violations of us trade sanctions, a person familiar with the matter told Reuters.

Perhaps the most striking detail of the arrest of Huawei executive Meng Wanzhou in Canada was that it took place on the same day that leaders from the U.S. and China were engaged in delicate trade talks in Buenos Aires.

The British bank HSBC is cooperating with United States authorities in its investigation, people familiar with the matter said Thursday.

State-run China Daily said the arrest of Huawei's chief financial officer appeared to be part of U.S. efforts to contain the company, which is the world's largest telecoms equipment provider, as well as its second-largest mobile phone maker.

Huawei is one of the world's largest telecoms companies, and is the world's second-largest smartphone manufacturer behind Samsung.

That includes theft of United States intellectual property by Chinese actors and forced technology transfers from USA companies to Chinese partners in joint ventures, he said.

Other nations are increasingly being forced to choose between Chinese and USA suppliers for next-generation " 5G" wireless technology.

Richard Kurland, a Vancouver-based immigration lawyer, said there was little chance Meng would be released from detention.

In 2012, the Australian government banned Huawei from bidding for NBN, Australia's broadband access network, for national security reasons.

Faced with this explosive report, Huawei first denied the story, calling the report "unfounded".

Officials in some governments, particularly the United States, have voiced concern that his company is close to the Chinese military and government. They agreed to a 90-day truce in an escalating trade war that is threatening world economic growth and has set global investors on edge.

Huawei's chief financial officer Meng Wanzhou is seen in a portrait

Meng rose through the company ranks through hard work rather than privilege, said Wenran Jiang, a senior fellow at the University of British Columbia's Institute for Asian Research.

In addition to Trump's tariffs, the administration is tightening regulations on high-tech exports to China.

"But we've had enormous concerns for years", Bolton said, "about the practice of Chinese firms to use stolen American intellectual property, to engage in forced technology transfers, and to be used as arms of the Chinese government's objectives in terms of information technology in particular".

The Wall Street Journal reported this year USA authorities are investigating whether Huawei violated sanctions on Iran. But Trump issued a reprieve, possibly in part because U.S. tech companies are major suppliers of the Chinese giant and would also have been scorched. ZTE, whose Hong Kong-listed shares were suspended in April because of the ban and only resumed trading in July, was also forced to replace its board. The tech company said it complies with all laws and rules where it operates.

Most people held on USA warrants are extradited quickly, he said in an interview. "And they took this decision without any political involvement or interference".

He also said the Iran allegations are very damaging to Huawei and said China will push back hard.

ZTE is China's second-largest telecommunications equipment maker and relies on US components for its smart phones and networking equipment.

David Mulroney, a former Canadian ambassador to China, said U.S. and Canadian business executives could face reprisals in China. He said arresting her without that violated her human rights.

James McGregor, the greater China chairman of the public relations firm APCO, likens the situation to what it would be like if Chinese law enforcement suddenly arrested a relative of Apple CEO Tim Cook or Microsoft founder Bill Gates. "If I was an American tech executive, I wouldn't travel to China this week". Beijing must develop innovative technologies to keep its economy growing as its labour force ages and it confronts a huge stockpile of debt.

Canada's cyber security chief said the country could face retaliatory cyber attacks.

"When that [news] turned up on my phone this morning, I was just breathless, actually - taken aback", McGregor says.

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