Huawei Arrest and the Future of US-China Relations

Narration: On Dec. 1st, the same day President Trump and his Chinese counterpart, Xi Jinping, agreed to a trade war truce, Canada arrested the chief financial officer of China’s Huawei Technologies, Meng Wanzhou. Meng is the deputy chair of Huawei’s board and the daughter of the company’s founder, Ren Zhengfei. The arrest warrant was issued by the United States a week earlier. A Canadian justice then issued a warrant on Nov. 30th. Meng allegedly committed fraud in 2013 by lying to U.S. financial institutions about Huawei’s connection with Hong Kong company SkyCom, which reportedly sold U.S. goods to Iran in violation of U.S. sanctions. Huawei is the world’s largest maker of telecommunications network equipment. In 2004, CISCO sued Huawei for using stolen Cisco technology to develop a lineup of routers and switches sold in competition to the American company. Cisco later dropped the lawsuit in exchange for a promise from its rival to modify its product lineup.

Narration: On Dec. 4th, 38 Chinese government branches published a united memo laying out an array of punishments over intellectual property theft. These measures include establishing a social credit system to target people and entities who commit severe intellectual property rights violations. The social credit score could restrict companies’ access to borrowing and state-funded support.

Narration: On the same day, President Trump tweeted, “Very strong signals being sent by China once they returned home from their long trip, including stops, from Argentina. Not to sound naive or anything, but I believe President Xi meant every word of what he said at our long and hopefully historic meeting. ALL subjects discussed!”

Simone Gao: What does all this say about the U.S.-China trade war and President Trump’s attitude towards China right now? Let’s hear from Greg Autry again.

Simone Gao: On Dec. 1st, Meng Wanzhou, Huawei C.F.O. and daughter of the founder of the company, was arrested in Canada for extradition to the U.S. What do you make of her arrest? Do you think it is related to the U.S.-China trade war?

Greg Autry: Absolutely. It, to some extent, couldn’t not be because the focus on the penalties that the U.S. is putting on China are not necessarily over the specific products on the list, but over the intellectual property theft and behavior that requires the transfer of intellectual property. And Huawei is like the poster child for stealing U.S. intellectual property and as a tool for the Chinese party to insert network infrastructure and communications infrastructure into Western countries that it can further use to inflict cyber espionage and industrial espionage on those countries. So it’s the perfect message to send. I don’t know whether the arrest was intentionally related to that, but Huawei has been a company that I identified back in 2013 when I testified to the House Foreign Affairs Committee on China cyber espionage as the primary target to look at. So I’m not surprised by that.

Simone Gao: Can America finally get what it demands from China this time? Let’s hear from Chen Pokong again.

Simone Gao: Will Xi Jinping honor his promises? Or will the U.S. meet its goals within 90 days?

Pokong Chen: For Xi and China they face two challenges: one, are they willing to keep their promises? And two, are they capable of performing their commitments? For the first, Xi is reluctant to do that. He tends to cope with Americans by delaying, stealing, and tricking. Lip service is his top option. As to his ability, that’s another question. Currently, there’s little chance for the Chinese regime to try to cheat the Trump administration again. The presence of all American hawks declares their assertiveness. Further, the lead negotiator was Robert Lighthizer, also a hawk, who served as deputy U.S. trade representative in negotiating with the Japanese 30 years ago, and who is a U.S. Trade Representative and a barrister. According to Navarro, Lighthizer will conduct reciprocal negotiations with China under “International Law” and other laws, chapter by chapter, article by article, until structural reforms. The deadline given by Trump is only 90 days. So if no deal is reached then, the trade war will go on and get escalated. For the CCP, therefore, it certainly wants to break its promises, to escape, and to delay. But I guess it’ll have great difficulty in doing so. There’s little room for Xi. Considering his breaking promises twice, a third time would bring China-U.S. relations to the brink of complete confrontation. It’s not just an issue of a new Cold War. An all-out conflict in every front, I’m afraid. The CCP would be most likely to repeat the collapse of the former Nazi Germany, militaristic Japan, and the former Soviet Union. So right now, the CCP finds itself at a critical crossroad, having to make a hard choice of where to go.