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Huawei

China tries to walk a tightrope as nationalist backlash over Huawei case threatens to derail US trade talks

  • Government continues to urge US and Canada to release Sabrina Meng Wanzhou, but Beijing does not want to imperil the current talks to resolve the trade war with Washington
PUBLISHED : Monday, 10 December, 2018, 10:33pm
UPDATED : Wednesday, 12 December, 2018, 8:38pm

As Huawei’s finance chief Sabrina Meng Wanzhou seeks bail, Beijing is walking a fine line between defending one of the crown jewels of the country’s tech industry and preventing a nationalist backlash that could derail its trade talks with Washington.

The chief financial officer and heir apparent to the Chinese tech giant has applied for bail after she was arrested in Vancouver, Canada, on December 1 at the request of the United States.

With Meng due to return to court on Monday for her continuing bail hearing, which began last week, China has been ratcheting up the pressure on both Canada and the US for her release.

Sabrina Meng bail hearing: Huawei CFO offers to pay for own guards

Over the weekend, Chinese foreign vice-minister Le Yucheng warned the Canadian ambassador to China that there would be grave consequences if Canada did not immediately release Meng.

China’s foreign ministry then summoned the US ambassador Terry Branstad to lodge a “strong protest” over the arrest, and called on Washington to withdraw its arrest warrant.

Beijing’s backlash continued on Monday, when foreign ministry spokesman Lu Kang offered a strong defence for Huawei, but refrained from drawing a direct link between the case and the continuing trade negotiations with the US.

“Huawei, as an autonomous and privately owned Chinese company, has maintained good cooperation with many countries. So far we have not heard instances where Huawei has posed threats to the security of any countries,” said Lu when asked about the growing concerns in Europe about Huawei.

Lu also claimed that Meng had been treated “inhumanely” in custody and had not been given adequate medical treatment.

Meng said in a sworn affidavit that she had been treated in hospital for hypertension after her arrest, while her lawyer told her bail hearing on Friday that she was unsuited to incarceration, citing a “carcinoma problem” as well as a blood pressure condition.

Huawei arrest signals trouble for US tech companies with business in China

Despite the Huawei imbroglio, Lu said that Beijing and Washington continued to be in close communication in their trade talks.

“We hope both sides can work together to achieve the consensus reached between our two countries’ leaders,” said Lu, without giving details on whether China was planning to send a trade team to Washington soon.

Sabrina Meng Wanzhou’s supporters converge on Canadian court

However, Meng’s arrest has triggered a nationalist backlash in China, drawing blanket media coverage and prompting a wave of posts on the official Weibo accounts of the US and Canadian embassies by social media users venting their anger and demanding Meng’s release.

Both Chinese and American analysts said the arrest should not derail the trade talks.

“We still have to continue the trade talks,” said Wu Xinbo, director of the centre for American studies at Fudan University. “Meng’s arrest is an individual case. Trade is the bigger issue.”

But Wu said that Meng’s case was likely to be put on the table during trade negotiations in Washington and that China would be more “clear-eyed” about America’s desire to contain the country’s technological rise.

US Trade Representative Robert Lighthizer insisted on Saturday that the arrest should not affect the negotiations, saying: “This is a criminal justice matter. It is totally separate from anything I work on or anything that trade policy people in the administration work on.”

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Scott Kennedy, deputy director of the Freeman chair in China studies and director of the project on Chinese business and political economy at the Centre for Strategic and International Studies, said he did not expect China to use the case as an excuse to stop negotiations on the grounds of “bad faith” from the US.

“It is important for China to become permanently comfortable with the idea that US is going to protect national security …. and it will not give China any indication that there will be any special exceptions,” he told a seminar held by the Centre for China and Globalisation in Beijing on Monday.

He said the talks should not be overshadowed by individual cases and should focus on the bigger picture – citing previous serious crises in bilateral relations such as the US bombing of China’s embassy in Belgrade in 1999 or the military jet collision over the South China Sea in 2001.

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A foreign business representative in China, who spoke on condition of anonymity, said that Chinese companies should pay more attention to compliance.

The US extradition request accuses Meng of fraud by covering up Huawei’s links to a company that traded with Iran in breach of US sanctions.

The business representative also said if the Chinese government takes any retaliatory action against Canadian companies which have done nothing wrong, it would make matters worse by weakening support for doing business with China.

A Chinese expert who spoke on condition of anonymity said that Beijing should be prepared for more incidents such as the Huawei one as relations with the US continued to worsen.

“China’s big companies and banks are also on the surveillance list of the US. If the Huawei case is not handled properly, the US will use it on more in the future,” said the expert.

Huawei CFO’s comments on compliance before Canada arrest

On Monday, Japan joined US, Australia and New Zealand in effectively blocking Huawei from taking part in its 5G network.

The Kyodo news agency reported, citing government sources, that Tokyo has decided to exclude Huawei and ZTE Corp, another China telecoms equipment giant, from public procurement as of April.

It added that Japan’s three major mobile phone carriers planed to take concerted action alongside the government, with company sources saying that they will stop using Chinese products in the current mobile base stations and for the next-generation 5G mobile communications network.