Huawei Drama – Bare Knuckle US /China Relations

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No wonder China is demanding the release of Huawei’s chief financial officer, Meng Wanzho. She was arrested Saturday in Vancouver, Canada. She is awaiting extradition to the USA.

The Globe and Mail newspaper, citing law enforcement sources, said she is suspected of trying to evade U.S. curbs on trade with Iran. Meng is also deputy chairman of the board and the daughter of Huawei founder Ren Zhengfei.

Arrest in Canada

This high level arrest took place, ironically just as President Donald Trump was sitting down with China’s President Xi Jinping negotiating a truce in the ongoing trade war between the two countries at the G20 summit in Argentina last weekend.

Canadian Prime Minister Justin Trudeau says his government had no involvement in the arrest.

The arrest comes at a sensitive time for US-China relations. The nations are locked in a trade war that has seen both impose duties on billions of dollars of one another’s goods. And that has sent stock markets across the world on rollercoaster rides.

China’s state media called the arrest of Huawei’s chief financial officer in Canada a “despicable rogue’s approach”, painting the move as a politically motivated effort to contain China’s rise.

One thing that is undoubtedly true and proven is the US is trying to do whatever it canto contain Huawei’s expansion in the world simply because the company is the point man for China’s competitive technology companies,” the China Daily editorial said.  — (c) 2018 Bloomberg LP

There will be a hearing today about the extradition and we will see if the US actually has a case.

It seems more than heavy handed to arrest the head of the world’s biggest tech company in a US neighboring country because they are breaking an embargo that was instituted by the USA.

What is the Problem with Huawei?

But the US and a few other Western countries have issues with China’s tech companies,citing state security, intellectual theft and bank fraud allegations – this seems to be related to Iran.

The United States has been looking since at least 2016 into whether Huawei shipped U.S.-origin products to Iran and other countries in violation of U.S. export and sanctions laws, Reuters reported in April. More recently, the probe has included whether the company used HSBC Holdings Plc to conduct illegal transactions involving Iran.

Sanctions and Money Laundering

In US Law, companies are barred from using the U.S. financial system to funnel goods and services to sanctioned entities. If the mobile phone and telecoms equipment maker conducted such transactions and then misled HSBC about their true nature, it could be guilty of bank fraud, experts say.

 In 2012,HSBC paid $1.92 billion and entered a deferred prosecution agreement with the same U.S. prosecutor’s office for violating U.S. sanctions and money-laundering laws.  HSBC’s U.S.-listed shares fell as much as 6 percent on Thursday after Reuters reported the bank’s link to the Huawei case. They ended down 3.6 percent.

Similar to the case of ZTE

Huawei’s expansion from its Chinese roots into the rest of the world has sparked concerns among Western governments. These mainly concers the company’s close ties to the Chinese authorities, as well as its willingness to export technologies to countries that are under sanction.

The probe of  Huawei is similar to one that threatened the survival of China’s ZTE Corp,which pleaded guilty in 2017 to violating U.S. laws that restrict the sale of American-made technology to Iran. ZTE paid a $892 million penalty.

According to Reuters, in 2016, the Commerce Department made documents public that showed ZTE’s misconduct and also revealed how a second company, identified only as F7, had successfully evaded U.S. export controls.

In a 2016letter to the Commerce Department, 10 U.S. lawmakers said F7 was believed to be Huawei, citing media reports. In April 2017, lawmakers sent another letter to Commerce Secretary Wilbur Ross asking for F7 to be publicly identified and fully investigated.

Is Huawei banned in the USA?

It seems that it is unofficially banned – besides being the biggest selling smartphone in the world; none of the US carriers want to deal with the Chinese company. Wherever the U.S. government has influence, at home and abroad, Huawei market access is blocked. But there are no comprehensive bans except for government and military contracts.

My Personal Journey with Huawei

I have had a Huawei P9 for the past two years and intend on upgrading to the Huawei P20Pro. I have had Nokia, Blackberry and Samsung phones before. I love my Huawei with it Leica camera. I mostly do social media with my phone and take photos. I believe that Huawei ranks right at the top as one of the best smartphone cameras.

It costs me less than an iPhone, which I think is overpriced for its functionality. And as for the spying allegations, why would Huawei spy on you and not Apple or Samsung? I believe all smartphones can be used as spy devices.

My Take on the Arrest of Ms Meng

My take on this is that the USA has a HUGE debt to China and Donald Trump is not managing to “make deals” the way he wants to, so he is looking for something to put pressure on them.

And don’t forget Trump’s main modus operandi – distraction! The Mueller Probe is getting really interesting and inching closer and closer to Trump and his family. So what does the Administration do – “Don’t look here, look there”.

 Also it is said that Huawei was dropped in the US by major carriers because they were silently threatened by the giants like Apple, Motorola to insure they would not lose business to this upstart competition Huawei presented. Equal phone quality for half the price.

U.S.diplomats have been busy abroad killing Huawei deals in Jamaica, South Korea, Australia, the Balkans, well, everywhere that U.S. influence exists.

Western Mainstream Media has been destroying Huawei’s reputation by airing reports that the FBI, the CIA, the NSA, the Department of Defense, and so on, are all issuing warnings that Huawei devices are spy-gear and a threat to US national security.

The fact is that Huawei has a growing influence on global communications. The Chinese company will provide technology for 5G wireless internet across the world. It seems as if the Western world is afraid of Chinese cyber dominance.

 So is this move just another of Donald Trump’s crass business moves? Is this going to slide into a trade war that will damage the whole world’s economy or is this going to become a high level threat like Trump issued to North Korea a while ago that will be resolved with a handshake and a smile?

I’m sure we will know more later today.