Big power tussle

Tensions escalate between the United States and China following the U.S.-orchestrated arrest of the Huawei top executive in Canada.

Published : Dec 19, 2018 12:30 IST

Demonstrators in support of Meng Wanzhou, the chief financial officer of Huawei Technologies Co., outside the Supreme Court in Vancouver, Canada, on December 11 where a bail hearing is on.

Demonstrators in support of Meng Wanzhou, the chief financial officer of Huawei Technologies Co., outside the Supreme Court in Vancouver, Canada, on December 11 where a bail hearing is on.

The chicanery and subterfuge employed by the Donald Trump administration to undercut China was on full display in the first week of December even as world leaders met in Buenos Aires for the G20 summit. President Donald Trump was engaged in talks with his Chinese counterpart, Xi Jinping, on the sidelines of the summit when Canadian authorities arrested Meng Wanzhou, the vice chairman and top financial officer of Huawei Technologies Co., one of China’s biggest tech companies. Huawei is the second biggest manufacturer of cell phones in the world. Meng was transiting through Vancouver airport when she was arrested by the Canadian police acting on charges filed by United States prosecutors that she had violated U.S. sanctions against Iran. The U.S. wants Meng to be extradited to that country.

News of the arrest was revealed only after the G20 summit ended. Canadian Prime Minister Justin Trudeau admitted that he was kept in the loop about the arrest but insisted that it was purely a matter between China and the U.S. Canadian prosecutors have, however, charged Meng with participating in a scheme to trick financial institutions into making financial transactions that violated U.S. sanctions against Iran.

Canada is part of an intelligence-sharing agreement known as the “Five Eyes” comprising the U.S., Canada, Australia, Britain and New Zealand and whose main purpose is to collect technology-related intelligence. With the arrest, Trudeau has dispelled all notions that under his watch there will be an independent and robust Canadian foreign policy. His action shows that he is as subservient to the U.S. as his conservative predecessor, Stephen Harper, was. Interestingly, after the talks between Xi and Trump, both sides signalled a 90-day truce in the trade war. Trump claimed that he was unaware of the arrest of Huawei’s vice chairman, who is the daughter of the founder of the conglomerate, Ren Zengfei. There were, however, not many takers for Trump’s plea of ignorance. U.S. prosecutors had alerted National Security Adviser John Bolton and prominent Senators, both Republican and Democrat, about the arrest. It is highly improbable that Trump was not briefed about the impending arrest. Bolton was with him in Buenos Aires when the arrest happened. Bolton told an American radio station that he was aware of the arrest plan even before it was put into action. He has accused Huawei and other Chinese companies of stealing intellectual property from their competitors in the U.S.

Top Trump administration officials suggested that the arrest would be used to put pressure on China to give more concessions in the ongoing trade war. Wu Xinbo, a professor of international relations at Fudan University, Shanghai, told The New York Times that most Chinese would view the arrest as part of the U.S.’ attempts to force their country to remain a manufacturer of low-end consumer goods. Hu Xijin, the editor of Global Times , said the arrest amounted “to a declaration of war”.

Calculated provocation

The timing of the arrest was a calculated provocation aimed at the Chinese government. “Imagine that Facebook’s Sheryl Sandberg was detained in Japan or Korea at the request of the Chinese government. Imagine what the political response would be in the U.S.,” said Li Daokui, a prominent Chinese scholar at Tsinghua University. On social media platforms in China, the general consensus was that it was a simple case of abduction by U.S. authorities of a Chinese citizen on foreign soil.

The Chinese government has demanded the immediate release of the detained Huawei executive. “Huawei is a symbol of pride and success in China, in much the same way Apple and Microsoft are in the U.S. Many in China see this [Meng’s arrest] as the U.S. trying not to compete but to disable its competitor. Others see it as another distraction to change the narrative in [Washington] D.C. away from Trump’s legal and political troubles,” said Einar Tangen, a China policy analyst.

The Chinese Vice Foreign Minister, Le Yucheng, summoned the Canadian Ambassador in Beijing, John McCullum, to register his country’s strong protest. Two days later, the U.S. Ambassador, Terry Branstad, was summoned to the Ministry. The Vice Foreign Minister said the U.S. had made “an unreasonable demand” on Canada. He described Washington’s actions as “extremely nasty”. “Only by correcting its mistake, immediately ending its violation of a Chinese citizen’s lawful and legitimate rights and giving the Chinese people a due explanation can Canada avoid paying a heavy price,” an editorial in Peoples Daily , the paper of the Chinese Communist Party, stated. “China will not stir up trouble. But nor is it afraid of trouble. Nobody should underestimate China’s confidence, willpower or strength,” it said. The spokesman for the Chinese Foreign Ministry said that detaining a person without providing an explanation “is undoubtedly a violation of human rights”.

Ominous message

The arrest also sends an ominous message. Henceforth, the U.S. can arrest any person it suspects of violating the unilateral and illegal sanctions it has imposed against Iran. Citizens from the European Union, India and other countries could be in danger of being arrested and repatriated to the U.S. while transiting through third countries. Indian public sector companies are continuing to do business with Iran despite the U.S. sanctions and threats. Since the 1940s, economic sanctions against countries have been part and parcel of the U.S. foreign policy.

Under the Foreign Corrupt Policies Act (FCPA), a U.S. law aimed at combating corruption of government officials, foreign nationals can be arrested on flimsy pretexts. Under the FCPA, which was introduced in 1977, the U.S. has anointed itself as the global anti-corruption policeman. No U.S. citizen has been arrested so far for bribing officials of a foreign government or indulging in corrupt policies in third countries.

Earlier this year, the Trump administration imposed a ban on ZTE Corporation, the second biggest tech company in China after Huawei, from operating in the U.S. on the grounds that it had sold equipment to North Korea and Iran. North Korea is also under stringent U.S. sanctions. But the Trump administration soon rescinded the ban after imposing a fine of $1 billion on the company. Many U.S. tech companies were impacted adversely by the ban on ZTE because they are major suppliers to the Chinese company.

Chinese and U.S. companies depend greatly on each other for components. “It is very hard to decouple the two without shooting ourselves in the foot,” said Adam Segal, a cyberspace analyst at the U.S. Council for Foreign Relations. Innovation in U.S. tech companies often depends completely on product development and testing by their Chinese partners. Xi considers companies such as Huawei and ZTE as the country’s “flag-bearers”.

Senator John Warner, a Democrat, who was privy to the news of the arrest before it became public, was appreciative of the Trump administration’s latest underhand move against China. “It is my hope that the Trump administration will hold Huawei fully accountable for the breaking of sanctions law,” Warner said. A ranking member of the Senate, Warner added that Huawei posed a threat to the U.S.’ national security. Warner’s stance is an illustration of the bipartisan support Trump’s hawkish policies on China enjoy in the domestic politics of the U.S.

The Trump administration’s top priority is to derail China’s peaceful efforts to become a tech superpower. It has gone a step further than the previous Obama administration in the efforts to push China into a corner. The Obama administration’s major focus was to encompass China militarily. The Trump administration has decided to go in for economic warfare against China, despite the fact that both countries are economically interdependent to a large extent.

The U.S. political establishment is particularly alarmed by the large strides China has taken in the tech sector. The Trump administration has prioritised the curbing of China’s rising technological prowess. It had imposed $250 billion in tariffs on Chinese goods, including on semiconductors and parts for nuclear reactors.

Huawei’s rise to become one of the biggest companies in the world has made it a favourite punching bag of the West. The U.S. has been putting pressure on its closest partners to keep Huawei out of their cellular networks and exclude it from the 5G mobile communications network. The U.S., Australia and New Zealand have already done the needful in recent months. In early December, Britain announced that it was keeping Huawei out of its 4G network.

The U.S. government has strong ties with its top tech companies. Silicon Valley owes its existence as much to the Pentagon as it does to private enterprise. The initial profits of the tech companies based in California came from contracts from the Pentagon. The first guidance systems for the U.S.’ nuclear missiles originated from Silicon Valley. In a statement published in 2017, the White House explicitly stated that “cutting edge semiconductor technology” was critical if the U.S. had to retain its status as the number one tech superpower. China established a National Integrated Circuit Industry Investment Fund in 2014 with the aim of building a self-sufficient semiconductor industry by 2025. This is one of the targets envisaged in Beijing’s ambitious “Made in China 2025” programme.

U.S. Vice President Mike Pence, in a major speech on October 4, which many commentators said was the declaration of “a new cold war” against China, demanded that Beijing abandon its “Made in China 2025” economic plan. The plan, Pence pronounced, was a blueprint to control “90 per cent of the world’s most advanced industries, including robotics, biotechnology and artificial intelligence”. Huawei is the leading innovator of 5G infrastructure. 5G communications networks will play a big role not only in home appliances and factory robots but also in warfare. The U.S. wants to retain its edge in these technologies by hook or by crook.

The Chinese side is trying its best to separate the Vancouver incident from the ongoing trade talks. Ma Jianting, a vice president of the Development Research Council which advises the Chinese leadership, said that there “would be no parting of ways” between the two countries as the economies of the two countries “are integrated”.

The Chinese Commerce Ministry spokesman, speaking after the arrest of the Huawei top executive, said he was confident that a trade deal would be reached within the stipulated 90 days that Trump and Xi had agreed to in Buenos Aires.

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