William Alan Reinsch
Both media and markets were roiled last week by the arrest in Canada of Meng Wanzhou, also known as Sabrina Meng, the Huawei chief financial officer as well as the daughter of the company's founder. This might be an important event, but it is too soon to panic or overinterpret. So far observers seem to be conflating four separate issues. Let's unpack them one by one.
First is the arrest itself. We learned at the bail hearing Friday that the United States is seeking Meng's extradition on fraud charges, alleging that she misrepresented to banks the relationship between Huawei and an "unofficial subsidiary,” Skycom. The United States warrant for her arrest was issued in August, so this is not a new development. That means that despite all the fevered speculation, this case on its face is not about sanctions violations or about Huawei products compromised by Chinese intelligence agencies or about Chinese telecom taking over the world. It is about fraud, which is a crime in both the United States and Canada. The Chinese, lacking both rule of law and an independent judiciary, will see this as part of a Trumpian plot to gain leverage in the upcoming negotiations or simply to embarrass China because that is what they would do under similar circumstances. And they will demand that our president and Prime Minister Trudeau fix it by making it go away—a common practice in their country but something entirely unacceptable in ours, even though we have a president who seems to have no compunctions about doing it. The more likely outcome is the correct one—the independent wheels of justice in Canada and the United States, will grind along, the case will be argued, and justice will be done.