The arrest of Meng Wangzhou, the chief financial officer of China’s tech giant Huawei and the daughter of its founder, has certainly raised lots of eyebrows across the world, to say the least, and must have outright shocked Beijing. She was detained in Vancouver, in Canada of all places, and is facing a US extradition request from the Eastern District of New York. For understandable reasons, China has launched an all-out diplomatic campaign demanding the rectification of a mistake and the release of Ms Meng.
This action is an absolute first. Never before has America attempted the extraterritorial rendition of a Chinese national, any foreign national for that matter, in connection with sanction violations. There have been all sorts of restrictions on financial transactions and even travel, but there appears to be no precedent for an arrest warrant. Meanwhile, the world is musing whether Ms Meng’s human rights have been violated and what the consequences of the actual extradition will be.
I believe we have collectively not grasped yet what all this means. If Washington is now in the business of detaining business executives, not just in Canada but potentially anywhere in the world, for the purpose of having them extradited onto US soil and tried for sanction violations there, what Chinese businessman is going to travel any longer, not just to the US but any jurisdiction that would be minded to easily kowtow to the forces in Washington.
And, in this context, think of Canada and the optics of its role here. In our part of the world, a Canadian passport has been held in highest regards. Chinese have become significant investors in Canadian real estate. But now, I could think of people having lost every respect for the Canadian government over their collusion with US courts. Justin Trudeau said he knew about the arrest beforehand but left the matter in judicial hands. If Chinese feel they can’t or don’t want to travel to Canada let alone reside there, who is going to be the first to sell property, in size?
Back to the matter at hand though. It has been reported that Ms Meng was arrested on December 1, the very day Donald Trump dined with Xi Jinping and agreed on a trade truce. Apart from the question whether the Americans were serious about it in the first place and the fact that the arrest has very likely destroyed all trust on the Chinese side of the table, one cannot help but wonder whether Trump actually knew about it when he shook hands with Xi. Overnight, the White House denied the president knowing.
Trump has every reason to drive a bargain with China. His trade war has already left an imprint on global trade, and as discussed previously there are indicators that point to a material weakening of the US economy in 2019. The last thing he needs is entering a reelection campaign with a recession on his hand. Also, it is not that China hasn’t signalled to make significant concessions on opening their markets, increase imports, and on intellectual property rights. The point is to maximise those concessions for America’s benefit.
Let’s assume for a minute that such action would not be pursued without the president’s blessing. So, he could have known about it, but this would constitute schizophrenia to the highest degree. Why knowingly escalate the conflict on the very day he was trying to de-escalate it? Maybe this was the reason that his facial expression at the table was genuinely stern. Did he have to put a brave face on and make the best of things that weren’t entirely in his control?
If you believe this to be the case, we are done here. However, if for whatever reason it wasn’t Trump ordering the arrest and he truly wasn’t given a heads-up, what does that mean? It is evident that some elements of the administration and bureaucracy in Washington believe that America needs to be more confrontational and provocative with China before it becomes too big and too strong to challenge. And what do you know…? As per overnight press reports, John Bolton of all people professed to have been in the loop.
Or the conspiracy extends to those and/or other forces to boycott Trump’s ambition to hammer out a deal for America and deny him a potential success story that he will desperately need on political grounds going forward. It is certainly interesting that the most communicative president of all times hasn’t said a word about the arrest. Is this part of the strategy, or is he embarrassed that he himself has to try to find out what actually happened?
In any case, this is a space to be watched carefully. If unlike the White House statement Trump was behind the arrest or at least gave his blessing, the chances for a trade resolution would be dim and worse encounters to be expected from here. If Trump himself was caught left field, it would mean that other forces are busy at work and the president is losing control of his government.
