Published December 7, 2018
We have been seeing news that Huawei Technologies Co. CFO Meng Wanzhou was detained in Canada enroute to Mexico, for possible extradition to USA. It is reported that the Trump Administration was aware of the potential impact on trade talks with China but intent on showing resolve over Chinese companies accused of violating U.S. law. Meng’s arrest is part of an ongoing investigation by U.S. prosecutors into whether Huawei violated banking laws as it sought to evade sanctions against Iran by routing a series of transactions through HSBC Holdings Plc, according to reports in Bloomberg. We understand from reports that in China, the detention of the high-profile executive has sparked an intense debate within the government on whether to retaliate against the U.S. or carry on with trade talks. There are also fears that there will tit-for-tat retaliatory arrest of American Executives based in China.
The arrest of Meng, the daughter of Huawei’s founder and a possible heir to the company, happened around the same time that President Donald Trump was dining with President Xi Jinping in Buenos Aires to discuss the trade war between the countries. The firm is one of China’s most iconic brands and the key to Xi’s plans to dominate new technologies such as 5G networks. White House National Security Adviser John Bolton, who sat at the table with Trump and Xi during the Group of 20 meeting in Buenos Aires, knew in advance of the U.S. request that Canadian authorities arrest Meng, he told National Public Radio on Thursday. After Bolton’s interview, a White House official said that President Trump was not aware of the arrest in advance, distancing the president from this event. It wasn’t clear when President Xi first learned of it.
On the face of it, it looks like the U.S-orchestrated detention of a leading figure in the Chinese technology industry undercuts a key goal for President Xi in the U.S. talks: to show relations between the U.S. and China returning to a more normal footing and hostility spilling into other sensitive areas such as Taiwan or the disputed shipping lanes of the South China Sea.
However, in our view, these events are never orchestrated in isolation. I am a great fan of International Intrigue genre of writers like Robert Ludlum, John Le Carre, Alistair Maclean and these events make me wonder if this is part of some Internal Chinese Power Struggle between President Xi and/or his loyalists in the Chinese Politburo vs. Meng Wangzou’s father, the Founder and CEO of Huawei who is a very powerful man in China.
In my opinion, the timing of the move against Meng is not coincidental and is driven some itinerary behind the scenes. One wonders if this part of a quid pro quo backroom deal between the US and Chinese Delegations to have Meng arrested as leverage for current Chinese Regime against her father, which could result in the US getting favorable consideration in Trade Negotiations from China now – case in point being the 90 Day Hold on additional tariffs being announced by the Trump Administration to smooth the way for a mutually acceptable deal. Only time will tell and could this be the plot of some future International Intrigue Thriller?