More Than Trade

6 December 2018


Cogito Ergo Non Serviam

Huawei CFO Detained in Canada for Busting US Sanctions on Iran


The CFO of Chinese smartphone maker Huawei, who is also the daughter of the founder and CEO and who may be the top dog one day, was arrested in Canada on December 1 at the request of the United States. The Americans say the detention is based on Huawei's alleged violations of America's sanctions on Iran. This is not the company's only problem as it tries to grow its influence around the world. Huawei's future is about more than trade. Even the ChiComs say so.

Meng Wangzhou, CFO of Huawei, was a Vancouver Airport in British Columbia where she was changing planes. Canadian authorities took her into custody, and at her request, authorities are not permitting members of the press an explanation or details. The US authorities have asked for her extradition, and the public may learn something at her extradition hearing.

Naturally, the Chinese communists are having kittens (never mind the inherent ridiculousness of alleged communists worrying about the fate of a woman who is a billionaire because of who her father is). The Global Times, a state-run nationalist "news" organization, said the arrest was a "declaration of war." Gavin Ni, the chairman of Zero2IPO Group, a group that advises many in China's investment industry (not terribly communist), posted on a social media account, "The China-U.S. competition is not merely a trade rivalry, but a rivalry on all fronts. Carry on, our motherland!"

The fact is that the ChiCom government in Beijing is a partner in every business enterprise in the People's Republic of China. When it comes to a manufacturer of tires or children's (lead painted) toys, that doesn't matter much. When it comes to cutting edge communications technology, the ChiCom government's participation creates political and security risks wherever Huawei does business.

As a result, the US Congress issued a report in 2012 highlighting the security risks involved in using equipment manufactured by a company that has Chinese intelligence officers involved in design. The major US cell carriers do not use Huawei products as a result.

The New York Times reported this morning, "Australia barred Huawei earlier this year from supplying technology for the country's fifth-generation, or 5G, mobile networks. New Zealand last week blocked one of its leading mobile carriers from buying Huawei's 5G gear. Britain's intelligence chief, in a rare public appearance this week, said that the country had a difficult decision to make on whether to allow Huawei to build its 5G infrastructure."

If another nation were involved, the government would probably claim that it had nothing to do with the company. But this is China. "The Chinese government and Chinese companies must face these new circumstances, take up new countermeasures and get through this stage of crisis," Fang Xingdong, the founder of ChinaLabs, a technology think tank in Beijing, said on Thursday. "This is a necessary rite of passage for China's global technological rise."

Mr. Fang is correct. China is a rising power, and unless accommodations are made for its increasing relative power, the global system is going to grow more and more unstable. Managing its rise to allow it a place in the sun while ensuring the rights of other states are respected is in everyone's interests. Letting the Chinese take their place is not the same as letting Huawei and other tech firms infiltrate non-Chinese businesses and governments with built-in back-doors and encryption functions for which Chinese intelligence bodies have the keys.

The arrest of Ms. Meng for possible violations of Iran sanctions shows that high-tech trade is much more than a commercial affair.

© Copyright 2018 by The Kensington Review, Jeff Myhre, PhD, Editor. No part of this publication may be reproduced without written consent. Produced using Ubuntu Linux.

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