Arrest battle may trigger Sino-U.S. Cold War-like rivalry

13, Dec. 2018

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By Tomoyuki Tachikawa

BEIJING, Kyodo - Sino-U.S. strains may resurge in the wake of China's detention of a former diplomat of Canada, a close ally of the United States, in apparent retaliation for the arrest of the chief financial officer of Chinese telecommunication giant Huawei.

An intensifying trade war between Washington and Beijing, waged by U.S. President Donald Trump earlier this year, has escalated beyond economic matters, raising fears that the world's two major powers could really engage in a Cold War-like rivalry in the years ahead.

On Dec. 1, Meng Wanzhou, CFO of Huawei Technologies Co., was arrested in Vancouver at Washington's request. She is accused in the United States of using a Huawei subsidiary called Skycom to evade sanctions on Iran from 2009 through 2014.

Huawei, a leading company in the field of next generation 5G mobile communications networks, was founded by Meng's father, Ren Zhengfei, a former engineer in China's People's Liberation Army.

The tech giant has played a crucial role in the "Made in China 2025" blueprint, under which Chinese President Xi Jinping has been trying to create global leaders in robotics, artificial intelligence and other advanced technologies at the state's initiative.

Amid growing concern about Chinese firms' potential ability to utilize U.S. products for spying, Washington has recently banned the use of technology goods and services of Huawei and ZTE Corp., another telcom giant in China.

"No major Chinese company is independent of the Chinese government and Communist Party, and Huawei, which China's government and military tout as a 'national champion,' is no exception." said Mark Warner, an influential U.S. Democratic senator.

"Huawei, like ZTE, poses a threat to our national security," Warner said in a statement last week, adding, "We need to take seriously the risks of doing business with companies like Huawei and allowing them access to our markets."

A source familiar with U.S. thinking said, Trump "will use the arrest of Meng as a bargaining chip" to make socialist China create a completely open, fair and transparent business environment where U.S. firms can sell their products without security worries.

In Buenos Aires on Dec. 1, U.S. and Chinese leaders agreed to complete talks about technology, intellectual property and cyber theft issues within 90 days, with Trump urging China to carry out structural reforms to rectify its alleged unfair business practices.

The White House said that if the two nations are unable to reach an agreement on such matters before the clock runs out, Washington will increase tariff levels on $200 billion of Chinese goods from the current 10 percent to 25 percent as it had planned.

A Canadian court, meanwhile, on Tuesday granted bail to Meng as she awaits possible extradition to the United States. That news appeared on the same day as it became known that China has detained former Canadian diplomat Michael Kovrig.

Kovrig was taken into custody by the Beijing branch of the Ministry of State Security, according to local media and the International Crisis Group, the think tank that he belongs to.

Chinese Foreign Ministry spokesman Lu Kang told reporters Wednesday that the Brussels-based non-governmental organization is not registered in China and its activities in the nation are illegal.

While links between the two detentions remain unclear, many foreign affairs experts say China has arrested Kovrig, who used to work in Beijing and Hong Kong as a diplomat, as a tit-for-tat measure.

Stephen Nagy, a senior associate professor of politics at Tokyo's International Christian University who knows Kovrig personally, told Kyodo News that it is not surprising for China to detain Kovrig as "retaliation" for the arrest of Meng.

"It's much easier to detain a Canadian than an American during the 90-day trade war pause. If they did this to the United States, Mr. Trump would go ballistic and the trade war would return with fury," said Nagy, also a fellow at the Asia Pacific Foundation of Canada.

The Trump administration, however, could respond more harshly to China than Xi's leadership expects.

A diplomat in Beijing from a European nation, who is well-versed in the U.S. and Chinese economies, told Kyodo News that China has made negotiations with the United States "more complicated" and a trade war has finally become a "political conflict."

The United States may have asked Canada to arrest Meng only because her company has violated U.S. unilateral sanctions against Iran, but China appeared to have detained Kovrig without adequate justifiable grounds, igniting a bilateral dispute, the diplomat said.

In the not-so-distant future, Washington might break off talks with Beijing and instruct U.S. firms operating in China to withdraw from the country's market, he said, adding, in the worst-case scenario, Trump could order U.S. citizens to leave China.

"It's a Cold War situation," the diplomat said. "I personally think that this would happen in the coming months because things have been changing at a rapid pace." (Kyodo)