Sabrina Meng: The first victim of the US trade war on China

In News by China Business Forum1 Comment

In a few months it will be a two years anniversary of Huawei CFO Sabrina Meng’s arrest. She was detained by the Canadian authorities in December 1 2018 at Vancouver International Airport while she was having stopover in on they way to Mexico. Later same month local court released her on C$10 million (US$7.5 million) bail. Meng is under house arrest and she has to wear a GPS ankle bracelet, submit to the 24-hour supervision of a private security firm and surrender her two Hong Kong and Chinese passports. She is still facing possible extradition to the United States on fraud charges related to alleged breaches of US and EU sanctions on Iran.

Sabrina Meng is not just an executive of Huawei but also the first child of Ren Zhengfei, founder and CEO of the Huawei. Even though media often portray Huawei as connected to the Chinese government or even as a state owned enterprise, Huawei is actually a private company. Ren Zhengfei owns 1.14% share of the holding company that owns Huawei and rest 98.86% are owned by 96,768 shareholding Huawei employees. By holding Meng US is having an leverage over her father and so influence over the whole Huawei. This is a nightmare for any family-run company where both the family and the company are put in danger.

Recently while Ren Zhengfei was showing journalists around his office it was noticed from the pictures that he had Chinese translation of Frenchman Frederic Pierucci's book The American Trap on his desk. If Ren has had time to read the book he probably can't be without mirroring his daughters case to that of Pierucci's. Pierrucci was an executive of French rail transport company and got arrested for bribery charges as he disembarked from a flight in New York in 2013. Pierucci pleaded guilty to charges and ended up spending two years years in prison in Pennsylvania and Rhode Island, and got put on parole for three years. In the book Pierucci claims that the anti- corruption investigation was motivated by the US attempt to help General Electric acquisite Alstom’s energy business.

It isn’t uncommon for companies to violate the US sanctions on Iran or other countries, and there has been several companies that have been indict for this offense. Banks like Deutsche Bank, Standard Chartered, HSBC, and Royal Bank of Scotland have paid fines for violating sanctions. The US e-commerce giant Amazon had to pay fines as it had failed to stop people residing in Iran buying goods and services on the site. So has also Chinese telecommunication company ZTE. Swedish 5G telecommunication competitor Ericsson end up paying penalty for sanction violation in Sudan. None of this have led to arrest or extradition of executive to the US.

To Huawei be singled out to get their executive arrested in an foreign country and facing extradition to the US for simple fraud charges related to alleged breaches of US and EU sanctions points to a political motive behind the operation. Even the Canadian police that handled the arrest of Sabrina Meng recognized "the highly political nature of the arrest" in a redacted Dec. 1, 2018 memo.

The US Attorney General William Barr has said that “China has emerged as the United States’ top geopolitical adversary.” He has also called the US universities, industry, society and its allies to join together countering threat posed by China. This is not how a country that believes in free markets acts, rather it reminds of an empire that is afraid of loosing its hegemony. 5G technology is an field where Huawei is more advanced than its main rivals Ericsson and Nokia, and years ahead of any the US competitors. This is why Huawei is seen as a major threat to the US. Despite all the measures taken by the US authorities, Huawei has became the largest smartphone manufacturer, surpassing both Samsung and Apple.

Donald Trump’s administration has used their influence outside the US to pressure foreign governments to restrict Huawei’s business. Trump has boasted in a press conference that “We convinced many countries — many countries — and I did this myself, for the most part — not to use Huawei because we think it’s an unsafe security risk. It’s a big security risk.” This has led the UK to ban mobile providers from buying new Huawei 5G equipment after 31 December 2020 Providers must also remove all Huawei's 5G kit from their networks by 2027. Move that was estimated by Digital Secretary Oliver Dowden to cost up to £2bn and delay 5G roll-out for "two to three years". Same time Korean telecom giant LG Uplus has declared that Huawei’s equipment does not pose any security risks.

In an interview shortly after the Meng’s arrest in December 2018 when asked if he would intervene with the Justice Department in her case President Trump said: “If I think it’s good for what will be certainly the largest trade deal ever made – which is a very important thing – what’s good for national security – I would certainly intervene if I thought it was necessary.” This implies that Huawei ‘s technology is not really seen as real national security threat, but just as an bargaining chip in a trade war against China.

Victim in this political war against Huawei is technology, as citizens are made to understand that new technology is security risk especially if it comes from a country that the US see as a threat to itself. Restrictions on Huawei equipment can cause delays globally on 5G roll-out and hinder digital transformation of our societies and businesses when we most need it. We should detach technology from the politics so that we can start creating solutions for global problems of our time. Also we should hope Sabrina Meng to be released as soon as possible. Law should be same for everyone and not be influenced by politics.


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Jari-Pekka Raitamaa

Founder and CEO of China Business Forum

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