Huawei Technologies CFO Wanzhou Meng spent this weekend in a Canadian jail which, I imagine, wasn’t really all that unpleasant an experience, although admittedly, I’ve never been arrested in Canada (that I can remember).
To say the U.S. might have made a mistake in deciding to compel Canada to (quite literally) capture Meng as she tried to catch a connecting flight to Mexico earlier this month would be an understatement. As noted here briefly last week and as every American news outlet has subsequently outlined in exhaustive detail, Meng is a “somebody” – and that’s putting it mildly.
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The fact that John Bolton knew the arrest was unfolding as he sat across the table and grinned at Xi Jinping in Buenos Aires makes this situation especially flagrant from Beijing’s perspective.
Meng’s bail hearing in Vancouver on Friday was inconclusive. Obviously, she’s a flight risk, which is precisely what the Canadian government argued. Meng’s lawyer, David Martin, absurdly contended that she wouldn’t skip bail because it would shame her father and also China. Martin also said she’d submit to electronic monitoring. The bail hearing will continue on Monday.
It sounds like Meng is probably “guilty”, although whether you believe she deserves to be locked up for three decades (which is the time she faces if she’s convicted in the U.S.) depends on your own subjective assessment of the relative merits of the laws she contravened. Long story short, she’s accused of facilitating bank transactions for what amounted to a Huawei subsidiary that did business with Iran in contravention of U.S. sanctions. So, in other words, banks thought they were dealing with Huawei, but in fact they were dealing with Skycom, a now defunct Hong Kong entity that tried to sell U.S. telecom equipment to Iran. Or something. It really doesn’t matter unless you’re a lawyer. The bottom line is that Huawei and Skycom were/are the same thing, and banks ended up clearing money they “shouldn’t” have because Meng obscured the relationship.
China let this slide for about 72 hours, but now, Beijing is starting to get irritated.
On Saturday, Vice Foreign Minister Le Yucheng told Xinhua that he went ahead and summoned Canadian Ambassador John McCallum. Canada, Le says, is dangerously close to suffering “consequences” for what he described as the “unreasonable, unconscionable, and vile” detainment of Meng. He didn’t specify what those “consequences” would be, but suffice to say Canada is in no position (economically or otherwise) to square off against China (with apologies to my Canadian readers of which there are a handful).
Fast forward to Sunday morning and Le has now summoned U.S. Ambassador Terry Branstad. The U.S., Le says, has violated the “legitimate rights and interests of Chinese citizens”.
Beijing is effectively demanding that the U.S. withdraw its arrest warrant for Meng and says “further measures” will depend on what the U.S. does next.
That’s not great news. Markets were not pleased with this situation when it came to light (at the worst possible time, just hours ahead of the reopen of U.S. equity futures after the national day of mourning for President Bush) and the fact that Beijing is stepping up the diplomatic pressure suggests this situation could well end up denting the prospects for an amicable resolution to the trade negotiations.
It is by no means certain that Meng will ultimately be handed over to the U.S., and even if she is, it will likely take a long, long time. In the interim, you can be absolutely sure that Canada will be carefully considering whether it is a good idea to undermine their relationship with Beijing at the behest of Donald Trump’s trade war which, by the way, has never been particularly popular with America’s northern neighbor. Trump’s at times rocky relationship with Justin Trudeau will likely make Canada even more hesitant to press this issue.
On Sunday, the People’s Daily promised that Beijing won’t “cause trouble,” but the Party mouthpiece also made it clear that China doesn’t “fear trouble” either.
We’ll leave you with an excerpt from the “editorial” (scare quotes there for obvious reasons):
Only if the Canadian side corrects its mistake and immediately stops infringing upon the lawful, legitimate rights of a Chinese citizen and gives a proper accounting to the Chinese people can it avoid paying a heavy price for this.
Ren Zhengfei, a former engineer in the Chinese People’s Liberation Army, founded Huawei in 1987 with 21.000 yuan, around US$5.000 at the time. Huawei is “owned” by the Chinese employees, 61000 of them receive a regular dividend. But they have no decisional power. Their shares receive dividends but have no voting power. Foreign employees receive no dividend. Very likely Ren controls the Board, and together with Chinese government officials takes the relevant decisions. The ownership structure remains opaque. What is sure that Ren has strong ties with the Chinese military and Communist Party.
The United States periodically raise security concerns with the Huawei equipment. They fear it can be used as an espionage tool.
But why in this specific case is US concerned with the sale of telecom equipment to Iran?
My take is that we know that Iran is developing middle/long range missiles. Ten year ago Iran could hit Israel and Saudi Arabia. Now its missiles can reach Europe. In another ten years they will be able to reach US.
Satellites in geostationary orbit check the airspace and are necessary to effectively hit a target, they check for speed, direction, altitude, ballistic trajectory and send data to computers on earth which in seconds elaborate adjustments. Fast telecommunications are essential here. But 5G provides also better responsiveness by reducing latency and the ability to connect more devices at the same time. The most important advances in 5G is that it will decrease latency, the delay before a transfer of data actually begins.
What are hypersonic missiles? Hypersonic missiles combine the speed of ballistic missiles with the accuracy and manoeuvrability of cruise missiles. The missiles are designed to travel at approximately 5,000 to 25,000 kilometres per hour. It’s possible to keep the target a secret until the last few seconds of their flight because of the uniquely low trajectory they take in the atmosphere. It is then that missile makes its final dive. ICBMs travel at much higher altitudes, they can be detected by missile ground sensors much sooner and so deflected. Also, because ICBMs are rocket-fuelled, their smoke is easily detectable from ballistic missile sensors in space.
Basically hypersonic missiles will be capable of evading current missile defences and would result in hair-trigger responses. The United States especially has a variety of early warning satellites and missile defence systems which would be rendered largely useless.
5G is not just like its predecessors a tool where a human communicate with another human or a computer/device. It’s more about devices communicating with other devices.
New information and communications technologies carry the potential to improve some existing military systems and reduce the utility of others. Greater use is also being made of artificial intelligence (AI) and machine learning in order to augment human capacity, to process increasing volumes of data more rapidly than before and to improve the effectiveness of weapons and other military systems. Key areas are robotics, quantum cryptography and quantum computing, artificial intelligence, and autonomous control. Nanosciences and materials science, which are important for seeking processing futures beyond current chip designs. Space, and developments in hypersonic flight.
When companies like Msft, Csco, Goog, and the likes are at the White House, they are not there to discuss the next app on our smartphones.
Nasdaq listed companies are also a strategic defence asset. It can be a real concern if ndx crashes, because companies also need their own stocks as money to buy and pay for innovations, research, development.
As regards the Meng matter, maybe it was best for Canada to do it the Italian way: as soon as they knew that Mrs Meng was embarking they should have advised her to change route. And leave the issue in US hands.
All this hoop-la over bank fraud accusations mixed up in trump’s “sanctions” and the fact that the accused is a female may even be a factor. Why in the hell would Canada participate in any action relating to trump’s trumped up sanctions? The hypocrisy of trump being on the accusing side of any bank fraud issue is hysterical! I think he knows all the games on that subject! The insulting behavior of smiley face Bolton sitting with Xi at the same time this woman was being detained really is outrageous. I bet he and trump had a big old laugh over that one!
The only time I smiled while reading all this was the mention of three decades in prison and trump — in the same story. 😃
I am guessing she will be freed and allowed to go back to China but her lawyers will be required to be in a courtroom and the US will say something about how she has been sanctioned or something that sounds good. It will dissolve into nothing that will be spun as being tough for US voters to hear. It was a calculated risk that backfired and now it is about getting out of the mess quietly. I suspect on Jan 4 we will have forgotten about all this and at some later point there will be a small blurb about it on TV and the papers. I would be very surprised if the US goes through with it.