Manufacture This

The blog of the Alliance for American Manufacturing

Fate of Huawei CFO is potential trouble for U.S.-Chinese negotiations.

The Chinese government is very mad that an executive at its homegrown telecommunications giant, Huawei, is being held in Canada at the request of the United States for her alleged role in helping the company evade sanctions around doing business with Iran.

How mad? We’re talking Summon-The-Ambassador mad.

Dang, that’s pretty mad. But that said, Chinese media has taken pains to not link the arrest of Meng Wanzhou, Huawei’s chief financial officer, to the ongoing trade talks between Beijing and the Trump administration. This is significant because, as one expert observer told Reuters, “if you don’t see any discussions in Chinese media, that’s the intention of the (Chinese) government.”

The United States is doing its part to delink the stories, too. Trump administration officials were on television this weekend calling the Huawei arrest a separate “criminal justice matter.”

But it remains to be seen if the case will bleed into the talks. In China, for instance, outrage over the arrest has boiled into calls for a boycott of Apple products and some companies even announcing plans to use nothing but Huawei products. And no one really believes the arrest, which happened the same day President Trump and China’s President Xi Jinping sat down for trade discussions in Argentina, aren’t linked.

In the United States, meanwhile, Sen. Marco Rubio (R-FL) is pushing legislation that would ban Huawei from doing business in America. That would be, uh, quite the escalation; because of its murky links to the Chinese government the company is already more-or-less banned from the U.S. government procurement market, and other countries (Australia, New Zealand, and now Japan) are following suit. If Sen. Rubio’s effort are somehow successful, it certainly would raise the bad blood between the two governments trying to resolve a major trade dispute.  

The Wall Street Journal notes both sides have reasons to want the talks to succeed. The shaky stock market is not going unnoticed at the White House, and the Chinese economy may be starting to stumble: “Customs data released on Saturday show an unexpected drop in growth of both Chinese exports and imports in November, portending weaker growth,” writes the Journal. A large Chinese government trade delegation was headed to Washington this week before Ms. Meng’s arrest was announced. It's unclear, the Journal reports, if they're still on their way. 

It will be interesting to see what the fallout will be. You know we’ll be keeping track!