Commentary: A winter of discontent awaits after Huawei executive arrested

Commentary: A winter of discontent awaits after Huawei executive arrested

Meng Wanzhou’s arrest has just set the stage for a freeze in China-Canada ties and there’s no telling how long they will remain sour, says Tom McGregor.

Meng Wanzhou, known internally as the 'princess' of Huawei, was arrested in Canada at the
Meng Wanzhou, known internally as the 'princess' of Huawei, was arrested in Canada at the Washington's request (Photo: AFP/Clement SABOURIN)

BEIJING: Expect to witness a further deterioration of Canada-China bilateral relations.

Shortly before the upcoming G20 Summit held in Buenos Aires, Argentina, Canadian Prime Minister Justin Trudeau had been informed that Meng Wanzhou, chief financial officer at Huawei, China’s largest maker of telecommunications equipment and smartphones based in Shenzhen, would be arrested by Canadian authorities, at the request of the US to be extradicted to face charges of misleading banks about transactions linked to Iran and putting them at risk of violating US sanctions.

TRUMP UNLIKELY TO BE BEHIND THE CHARGES

Rumours are swirling as many say the move was motivated by President Donald J Trump as a show of force against China but President Trump is not a likely driver behind Meng’s arrest.

At the G20 Summit in end-November, Trump had stood alongside Trudeau and Mexican President Enrico Pena to sign the formal US-Mexico-Canada Agreement, but nary a word was mentioned to Trump about Meng’s imminent arrest in Vancouver.

The extradition documents filed in the warrant for her arrest was not signed off by the office of the Department of Justice (DOJ) in Washington, but by a judge in the US District Court of the Eastern District of New York state. 

It is a jurisdiction of the DOJ that has long earned notoriety in opposing President Trump and taking on controversial cases including the prosecution of Trump’s longtime lawyer and fixer Michael Cohen.

The move also comes at an odd time when Trump had just successfully negotiated a 90-day trade truce settlement with Chinese President Xi Jinping two weeks ago. 

The US had agreed to halt raising tariffs on Chinese imports for the next three months in exchange for China agreeing to important changes to the nation’s policies on tech-transfers, intellectual property protections, and trademarks rights, as well as pledging to show sincere efforts to narrow the US-China trade imbalance.

READ: The US-China rivalry is all about us, a commentary

Huawei CFO Meng Wanzhou, who was arrested on an extradition warrant, appears at her bail hearing in
Huawei CFO Meng Wanzhou, who was arrested on an extradition warrant, appears at her B.C. Supreme Court bail hearing in a drawing in Vancouver, British Columbia, Canada December 7, 2018. (Photo: REUTERS/Jane Wolsak)

One can argue that prosecutors in the US DOJ seeking Meng’s extradition should have warned their president about an issue that was about to blow up, where it has huge foreign relations ramifications for the US.

One could also argue that it was remiss for Trudeau not to mention it at all to Trump. 

Regardless, this diplomatic ruckus has now resulted in huge embarrassment for the Chinese government and a riled up Beijing will only see shadows.

BEIJING RATTLED

Beijing is not pleased with what increasingly looks like Canada’s cloak-and-dagger games and complicity in aiding US authorities to clamp down on Chinese tech giants. 

That Trump has said he would intervene in the case if it served US national security interests only serves to deepen those suspicions.

The least Trudeau could have done is to give both the US and China diplomatic heads up so that the impact from the fall-out could have been mitigated.

Although Chinese media have highlighted that there was no link, many suspect China had responded tit for tat, as former Canadian diplomat and current senior advisor on Northeast Asia for the International Crisis Group Michael Kovrig, was taken into custody this week while on a trip to Beijing. 

A second Canadian, businessmen Michael Spavor, has now gone missing after notifying the Canadian government he was being questioned by Chinese authorities. 

A sign in support of Huawei CFO Meng is displayed outside of the B.C. Supreme Court in Vancouver
A sign in support of Huawei CFO Meng Wanzhou is displayed outside of the B.C. Supreme Court bail hearing of Meng, who is being held on an extradition warrant in Vancouver, British Columbia, Canada December 10, 2018. (Photo: REUTERS/David Ryder)

In the eyes of Beijing and many Chinese citizens, they view the International Crisis Group as a Western-funded anti-China organisation. Few Chinese will feel sympathetic to Kovrig’s plight but Canada should be worried. Human Rights Watch has described Chinese prisons as places of “routine institutional torture”.

Additionally, Meng’s upcoming court date, after being granted a US$10 million bail this week, is scheduled no earlier than February.

Against this backdrop, China and Canada must brace themselves for a winter of discontent. A trade delegation for British Columbia has already announced the cancellation of an upcoming trade tour to China. 

Chinese media are also going into overdrive in calling on Canada to release Meng and seeking to drive a wedge between Canada and the US.

Yet, that’s just the beginning.

Canadian firms that have working relationships with Chinese companies are likely to get hardest hit. Meng’s arrest has just set the stage for a freeze in China-Canada ties and there’s no telling how long they will remain sour.

Tom McGregor is a commentator on Asia-Pacific affairs based in Beijing.

Source: CNA/nr(sl)

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