Huawei executive's arrest drives home the deepening U.S.-China trade conflict

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The dramatic arrest of a Chinese telecommunications executive has driven home why it will so hard for the Trump administration to resolve its deepening conflict with China.

In the short run, the arrest of Huawei's chief financial officer heightened skepticism about the trade truce that Presidents Donald Trump and Xi Jinping reached last weekend in Buenos Aires, Argentina. On Thursday, U.S. stock markets tumbled on fears that the 90-day cease-fire won't last before regaining most of their losses by the close of trading.

But the case of an executive for a Chinese company that's been a subject of U.S. national security concerns incident carries echoes well beyond tariffs or market access. Washington and Beijing are locked in a clash over which of the world's two largest economies will command economic and political dominance for decades to come.



The company operates a U.S. sales and marketing office in Plano. Its telecommunications and networking competitors, including Ericsson, Nokia and British Telecom, also have operations in Dallas-Fort Worth.


Huawei finance chief Meng Wanzhou&nbsp;(TNS)
Huawei finance chief Meng Wanzhou 

The Huawei executive, Meng Wanzhou, was detained by Canadian authorities in Vancouver as she was changing flights Saturday -- the same day that Trump and Xi met at the Group of 20 summit in Argentina and produced a cease-fire in their trade war. The Globe and Mail, citing law enforcement sources, reported that Meng is suspected of trying to evade U.S. sanctions on Iran. She faces possible extradition to the United States, according to Canadian authorities.



In the view of the United States and many outside analysts, China has embarked on an aggressive drive to overtake America's dominance in technology and global economic leadership. According to analysts, China has deployed predatory tactics, from and forcing American and other foreign companies to hand over trade secrets in exchange for access to the Chinese market to engaging in cyber-theft .


In addition to Trump's tariffs, the administration is tightening regulations on high-tech exports to China. It is also making it harder for Chinese firms to invest in U.S. companies or to buy American technology in such cutting-edge areas as robotics, artificial intelligence and virtual reality.



British Telecom said this week that it would stop using Huawei equipment in its 5G network, the BBC reported, and U.S. lawmakers have lobbied Canada's prime minister to freeze out the Chinese supplier. New Zealand and Australia already have, according to news reports. Other, less wealthy nations are concerned less about spying and more about low prices, which plays to Huawei's advantage.



"There is ample evidence to suggest that 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," Sens. Mark Warner, D-Va., and Marco Rubio, R-Fla., wrote in October to Prime Minister Justin Trudeau. They urged him to keep Huawei off Canada's next-generation network.




Scissors said he doubts that China will change its tech policies. Beijing must develop innovative technologies to keep its economy growing as its labor force ages and it confronts a huge stockpile of debt. Yet its political and economic system -- which promotes inefficient state-owned companies at the expense of nimbler private ones -- discourages innovation.



Paul Wiseman and Frank Bajak, The Associated Press