[kictanet] Arrest of a High-Profile Huawei Executive

[S.M. Muraya]

Interesting super power, "devents"..

Beyond resisting selling out (infrastructure projects) to foreigners, focus
on importance of developing localized intelligence (intellectual property)
firms..

http://time.com/5472538/arrest-huawei-executive-trump-deal-china/

http://time.com/5472538/arrest-huawei-executive-trump-deal-china/

How the Arrest of a High-Profile Huawei Executive Could Upend President
Trump's Truce with China

By DAVID TWEED AND PETER MARTIN / BLOOMBERG Updated: December 6, 2018 10:41
AM ET

(Bloomberg)—On the same day Donald Trump and Xi Jinping struck a trade war
truce in Argentina, some 7,000 miles away Canadian authorities made an
arrest that now threatens to make the U.S.-China conflict much worse.

The U.S. is seeking the extradition of Wanzhou Meng, chief financial
officer of Huawei Technologies Co., after convincing Canada to arrest her
on Dec. 1. Canada confirmed she was in custody shortly after the Globe and
Mail reported she had been arrested in connection with violating sanctions
against Iran.

China promptly reacted with outrage after the news broke, demanding that
both countries move to free Meng. Later, the foreign ministry said it was
waiting for details on why she was arrested, and said trade talks should
continue.

It’s hard to overstate the significance of her arrest in Beijing: Meng is
the daughter of the founder of Huawei, a national champion at the forefront
of Xi’s efforts for China to be self-sufficient in strategic technologies.
While the U.S. routinely asks allies to extradite drug lords, arms dealers
and other criminals, arresting a major Chinese executive like this is rare
— if not unprecedented.

“The timing and manner of this is shocking,” Andrew Gilholm, director of
North Asia analysis at Control Risks Group, said by phone. “It’s not often
the phrase OMG appears in our internal email discussions. ”

Right now it’s unclear what role Trump played in Meng’s arrest, or if he
will intervene at some point. The U.S. leader has spent the past few days
seeking to convince the world — and skeptical equity investors — that China
has agreed to major concessions, including reducing or removing tariffs on
U.S. cars. Stocks fell across Asia on Thursday.

Analysts said it’s more likely the case proceeded separately from the trade
talks as part of Trump’s efforts to step up prosecutions against Chinese
companies that conduct economic espionage and violate sanctions. In
October, the U.S. said Belgium extradited a Chinese intelligence official
accused of stealing trade secrets from U.S. companies — an unprecedented
development.

Either way, China is almost certain to view Meng’s arrest as a major
escalation in the trade war that will foment fears of a wider Cold War
between the world’s biggest economies. As part of trade talks, Trump has
insisted that China stop providing government support to strategic sectors
including artificial intelligence and robotics as part of its “Made in
China 2025” policy.

‘New Game’

“It will definitely complicate the negotiations and they may believe this
was done to increase the pressure during this 90-day period,” said Dennis
Wilder, a former CIA China analyst and senior director for Asia at the
National Security Council under President George W. Bush.

“This is sending a signal that there is a new game,” Wilder said of the
recent U.S. arrests. “They are trying to deter Chinese espionage and make
it clear that there are real consequences.”

Perhaps no company better personifies the perceived trade threat than
Huawei. It’s overtaken Apple Inc. in smartphone shipments and aims to
surpass Samsung Electronics Co. while targeting record sales of $102.2
billion this year — more than Boeing Co. It’s shooting for the lead in
fifth-generation wireless networks and preparing to take on some of
America’s biggest chipmakers.

That’s why Trump’s administration invoked its name in blocking a Qualcomm
Inc.-Broadcom Inc. merger that would’ve been the largest deal ever, saying
it would hand the lead in 5G to China. Huawei has since been blocked from
selling its gear in Australia and New Zealand, got frozen out of a Korean
contract, and faces U.S.-led competition even in Papua New Guinea.

The latest U.S. action against Huawei may be even more significant. While
the company has made advances in developing its own microchips, it still
relies on American equipment to make its networking gear and smartphones.
ZTE Corp., another Chinese technology company, nearly collapsed due to U.S.
penalties for violating Iran sanctions before Trump rescued it following a
request from Xi.

The ZTE case showed China’s leaders that they needed to become independent
from the U.S. when it comes to critical technologies like semiconductors
and network infrastructure, according to Graham Webster, coordinating
editor of DigiChina at the Washington-based think tank New America.

“What makes Huawei important is that it is a leader in developing
technologies that will make China less dependent on U.S. or European
suppliers,” he said. “Targeting Huawei through seeking the extradition of a
top executive is a major move by the U.S. government, whether coordinated
or not.”

For some analysts in China, it shows that the U.S. national security
apparatus isn’t interested in cutting a deal, no matter what Trump thinks.

“Their goal is to decouple with China,” said Wang Yong, a professor at the
School of International Studies at Peking University. “Negotiations are the
wish of Trump and Wall Street.”

Contact us at editors at time.com.
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