Huawei: The Signs Were There
The move by US authorities against Huawei Technologies Co. Ltd. is no surprise to those who've been following Washington's pursuit of China's telecom suppliers. (See China Slams Huawei CFO's Arrest, Huawei 'Not Aware of Any Wrongdoing'.)
The Commerce Department subpoenaed Huawei's US head office in 2016 over alleged illicit shipments to Iran and four other countries -- Syria, Cuba, North Korea and Sudan.
And according to Reuters, the Justice Department was running a probe out of the US attorney's office in Brooklyn since at least early this year.
There is also a ZTE Corp. (Shenzhen: 000063; Hong Kong: 0763) internal document (which the Commerce Department has made available) in which a company, F7, is praised as being better at evading sanctions laws.
F7, the document tells us, is a large company that had been the subject of a Congress report and also in a partnership with Symantec. Given these details, F7 seems likely to be Huawei.
That document was one of a cache of files confiscated from a ZTE laptop that ensured that the feds had a watertight case.
So it's been evident for some time a case against Huawei has been pending.
However, we know none of the details, including what charges Meng Wanzhou faces. She is reportedly due to appear at an extradition hearing on Friday, six days after she was detained.
So we can ask why Meng and why now?
First, it is hard not to note the timing, just as the US and China had reached a ceasefire in their trade war.
Whether it is to ratchet up pressure, to indict Beijing as a bad actor, or just to provoke, we don't know.
Even more inflammatory is the individual. Meng (also known as Sabrina and previously Cathy) is the elder daughter of Huawei founder Ren Zhengfei, one of China's most storied business leaders.
Her arrest at an airport gate is analogous to the daughter of Bill Gates or Jeff Bezos being detained in China. It certainly has China's attention.
But we should also note the big change from earlier cases. US attorneys are now going after individuals, not companies. Law-breaking executives are putting themselves at personal risk.
For the US and other Western nations, the issue in play isn't sanctions but the rules of commerce and getting Chinese to abide by them.
A widely held view of this among Western pundits is that -- after the on-again, off-again penalties against ZTE -- the US needs a much more robust approach to staunching IP theft and forced technology transfer.
By contrast, the Chinese media could have been discussing a completely different case.
You won't find any mention of ZTE's guilt or F7 or industrial espionage.
For the revved-up Chinese public this is aimed at "halting the rise of China."
In one typical response, a columnist in the nationalist Chinese language Global Times accused the US of trying to achieve by "despicable hooligan methods" that which it could not achieve in the market.
This trade war has suddenly warmed up. It could go anywhere.
— Robert Clark, contributing editor, special to Light Reading