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Experts Say China Could Retaliate for Huawei Arrest

Should the U.S. take a hard line against Huawei?

by Axios | 12.6.18

The arrest and pending extradition of Huawei chief financial officer Meng Wanzhou for violating Iran sanctions may have quick, dramatic impacts in international politics and global technology sales.

Why it matters: The beleaguered Chinese electronics and telecommunications equipment firm is now facing geopolitical crises on two fronts: British telecom giant BT just barred use of Huawei products in its 5G network. The arrest of Meng, the CFO and daughter of the company's founder, is a blow to the company on top of an already bad situation.

We may have cornered a wounded corporation. "Huawei is one of the Chinese government's pet companies," said James Lewis, director of technology policy at the CSIS think tank and a former Commerce Department official who worked on Chinese high tech policy. "They will retaliate and China will take hostages.

"If I was an American tech executive, I wouldn't travel to China this week," Lewis added.

Background: Meng was arrested in Canada and will be extradited to the United States. China has demanded her release.

  • The U.S. has investigated Huawei for export violations since 2016.
  • Huawei denies all charges. In a statement, it wrote, "The company has been provided very little information regarding the charges and is not aware of any wrongdoing by Ms. Meng. The company believes the Canadian and U.S. legal systems will ultimately reach a just conclusion."

The intrigue: The South China Morning Post reported Meng sent a memo to employees saying there were some situations — "yellow lines" as opposed to "red" ones — in which it would be OK to violate sanctions laws, she said.

The charges echo similar charges against ZTE. Both Chinese companies manufacture tech equipment. ZTE has twice admitted to sending equipment to Iran and North Korea, ultimately settling for a $1 billion fine and organizational changes.

Huawei, like ZTE, is often accused by U.S. lawmakers of sabotaging its products to allow Chinese surveillance. Those allegations have led many nations, including the U.S., to bar the firms' equipment from use in telecommunications projects.

  • Ironically, Canada — which made the arrest — has not banned Huawei equipment.

Sen. Marco Rubio (R-Fla.) celebrated the arrest in an email to Axios and encouraged Canada to reverse course on permitting Huawei wares. "[Huawei] has long posed a serious risk to U.S. national security, and I continue to strongly urge Canada to reconsider Huawei’s inclusion in any aspect of its 5G development, introduction, and maintenance," he wrote.

  • Sen. Chris Van Hollen (D-Md.) also endorsed a hard line against Huawei. In a statement, he wrote, "Huawei and ZTE are two sides of the same coin — Chinese telecommunications companies that represent a fundamental risk to American national security. While the Commerce Department focused its attention on ZTE, this news highlights that Huawei is also violating U.S. law. At a bare minimum, we must hold both companies to the same standard."

Joe Uchill

Photo: VCG/VCG via Getty Images

Axios

Written by Axios

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Leave a comment
(37)
  • burrkitty
    Voted Maybe
    last Saturday
    ···

    Hmmm. Well, good luck with that. If we wreck trade with China it’s probably going to be permanent. Just so long as everyone understands how much damage that will do. They are over there ruining their environment making things we won’t make for cheaper than we could make them. They get the long term consequences of environmental degradation and we get the products. It’s not a bad deal for us. We can make more money, they can’t make a new healthy environment. Just saying.

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  • Mark
    Voted Yes
    last Saturday
    ···

    China is a Kleptocracy. This is a godless nation where deception is institutionalized. They must always be dealt with swiftly and harshly. Strength is the only thing they respect and understand.

    Like (4)
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  • anatidae
    Voted No
    12/06/2018
    ···

    This is because of baseless claims that their technology poses a National security threat. As if US companies don’t do similar.

    Like (3)
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  • Virginia
    last Friday
    ···

    Well, u have ur job cutout for u Mr. President. Negotiate !!! This is a big one.

    Like (1)
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  • Lionman
    Voted Maybe
    last Friday
    ···

    I don’t think it’s a question of IF China will retaliate, but when.

    Like (5)
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  • Leon
    Voted Yes
    12/06/2018
    ···

    Provided this isn’t driven by large tech in the US that Huawei competes with.

    Like (3)
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  • TrulyTexan
    Voted No
    last Saturday
    ···

    I’m sooo sorry every country does not take our sanctions into account when doing their own business. Must make trump and his cronies have the sadz. Maybe we should go after the people committing crimes like genocide and murdering journalists.

    Like (2)
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  • Cruise missile
    Voted Maybe
    12/06/2018
    ···

    I say Maybe, on this point, this China is a problem, Trump will hit them hard, but For now sounds like fake news still, and Trump and Xi made the deal, so lets see

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  • James
    Voted Yes
    12/06/2018
    ···

    When does this stop! I always thought the Chinese were smart and innovative people but apparently not as all their technology like the Russians is stollen technology! As Americans were always do trusting and thing that their intellectual property was secure as patents are supposedly protected by international law! Those clowns play by their own rules! What part of it does business not get! And the Federal Government for that matter!

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  • Anita
    Voted Yes
    last Friday
    ···

    Senator Marco Rubio has been working hard to make Laws and Legislatures for just this type of National Security. Yet the Media does not Spot Light what he and others have been saying for a long time. djt has made “America Alone” his Foreign policy and has not been able to make any headway with “Trade Agreements” with any Country. If our stance is to take one of China’s Companies suspected person because of illegal behavior about China’s illegal Surveillance in our Country than ( djt ) needs to Safety bring our Overseas workers Safely home. The incompetence of this administration to work with Worldwide Leaders and secure J. O. B’s and Businesses to remain in our Country has been a Disaster!! I am embarrassed and heartbroken for our Nations People! This is the worst possible time to arrest any person because it puts our workers Abroad in Harms Way!! Save this for a time when Senators can get Legislation and Laws in place and leave this for a Different Administration that can handle Foreign Politics and National Security!

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  • Michael
    Voted No
    last Friday
    ···

    This is a failed strategy. Like they say, the fight starts when the argument is lost. This is about the USA imposing unilateral sanctions on Iran against the wishes of the majority of countries. Those sanctions are flawed and we are now fighting a rearguard action to try and make them credible. The mistake was trying to impose sanctions on Iran against the agreement we made with many countries including Europe and China. The next effect of this will be the continued isolation of the USA as others work to implement a more equitable system. The problem is we partnered with Saudi Arabia in the Middle East, yes the ones that cut up journalists and are starving 12 million people in Yemen. Iran is one of their enemies. Also we, along with the British, overthrew the legitimate Iranian government and planted our own man in there, there is no surprise that this made them hate us. Arresting CFO’s of Chinese companies is not a solution it is an expansion of an old problem into a whole new problem.

    Like (2)
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  • Stickyfingers
    Voted Yes
    last Friday
    ···

    She is a spy.

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  • Steve
    Voted No
    last Friday
    ···

    Ban all Chinese imports. This is simply the way they do business.

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  • Lance
    Voted Yes
    12/06/2018
    ···

    Personally do not think much will happen as China and US government have just signed a new trade deals neither country would want to interrupt them..l

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  • Arlene
    Voted Maybe
    last Friday
    ···

    This arrest puts our US executives doing business in china in jeopardy. There are better ways to stop Intellectual theft that don’t. Jus plain thoughtless and stupid!!!

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  • fdbetancor
    Voted Yes
    last Friday
    ···

    Ms. Meng has been arrested on charges brought against her for violating sanctions laws; if there is no evidence or it is weak, then she will be realized by a court of law. Until then, she should remain in custody. China has no standing to protest; the same course of action should be taken with any private person who violates the law (and there are plenty more that come readily to mind in the private sector)

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  • Delmar
    Voted Yes
    last Sunday
    ···

    If they are doing espionage then yes!!

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  • Tardisintime
    Voted Maybe
    last Friday
    ···

    If the allegations are true, yes. If not, no. The government has long accused Huawei have wrong doing, with little evidence.

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  • Chris-Breseman
    Voted Maybe
    last Friday
    ···

    Dunno enough about this topic to have an educated opinion.

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  • Louis
    Voted Yes
    last Friday
    ···

    China is friend you only trust as far as you can throw them. They need and want global trade but only so far as it benefits them. Their tech companies have to close of ties to there government and we should be very cautious when dealing with any company based in China.

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