Rogue Company

Canada approves Huawei extradition proceedings

By David Ljunggren

OTTAWA -- The Canadian government, as expected, on Friday approved extradition proceedings against the chief financial officer of Huawei Technologies Co Ltd.
Meng Wanzhou, the daughter of Huawei’s founder, was detained in Vancouver last December and is under house arrest. 

In late January the U.S. Justice Department charged Meng and Huawei with conspiring to violate U.S. sanctions on Iran.
Meng is due to appear in a Vancouver court at 10 a.m. Pacific time (1800 GMT) on March 6, when a date will be set for her extradition hearing.
“Today, department of Justice Canada officials issued an authority to proceed, formally commencing an extradition process in the case of Meng Wanzhou,” the government said in a statement.
China, whose relations with Canada have deteriorated badly over the affair, denounced the decision and repeated previous demands for Meng’s release.
U.S. Justice Department spokeswoman Nicole Navas Oxman said Washington thanked the Canadian government for its assistance. 

“We greatly appreciate Canada’s steadfast commitment to the rule of law,” she said in a statement.
Legal experts had predicted the Liberal government of Prime Minister Justin Trudeau would give the go-ahead for extradition proceedings, given the close judicial relationship between Canada and the United States.
But it could be years before Meng is sent to the United States, since Canada’s slow-moving justice system allows many decisions to be appealed.
A final decision will likely come down to the federal justice minister, who will face the choice of angering the United States by rejecting the extradition bid, or China by accepting it.
Professor Wesley Wark of the University of Ottawa’s Graduate School of Public and International Affairs said “the Canadians will take a beating throughout this whole process” from China.
“I suspect the Trudeau government is desperately hoping that the Americans reach a deal with the Chinese,” he said by phone.
Donald Trump told Reuters in December he would intervene if it served national security interests or helped close a trade deal with China, prompting Ottawa to stress the extradition process should not be politicized. 

Last week Trump played down the idea of dropping the charges.
After Meng’s detention, China arrested two Canadians on national security grounds, and a Chinese court later sentenced to death a Canadian man who previously had only been jailed for drug smuggling.
Brock University professor Charles Burton, a former Canadian diplomat who served two postings in China, said Beijing was likely to retaliate further.
“They’re not going to take this lying down ... one shudders to think what the consequences could be,” he told the Canadian Broadcasting Corp, saying Beijing might crack down on Canadian canola shipments or stop Chinese students from going to Canada.
Ottawa rejects Chinese calls to release Meng, saying it cannot interfere with the judiciary.
Beijing had earlier questioned the state of judicial independence in Canada, noting the government faces accusations that it tried to intervene to stop a corruption trial.
Canadian Justice Minister David Lametti declined to comment.
Huawei was not immediately available for comment.

The Fate of Huawei Foreshadows the Fate of China

Both the United States and the European Union have introduced new policies aimed at keeping high-tech know-how out of evil Chinese hands

By MICHAEL SCHUMAN

Visitors walk past a Huawei stand at the 2017 Mobile World Congress in Barcelona, Spain.

As Ken Hu, the “rotating” chairman at Huawei Technologies, made the case during a briefing in southern China that his company’s telecom equipment was trustworthy and above board, he did something mundane for many global executives, yet remarkable for the embattled Chinese giant: He took questions from foreign journalists.
Hu’s press conference on Tuesday was an all-too-rare attempt by Huawei’s top brass to engage with the world—and it comes at a critical moment. 

This month, Hu’s colleague and the company’s chief financial officer, Meng Wanzhou, was arrested in Canada, accused of misleading financial institutions to break U.S. sanctions on Iran. 

Meng’s arrest is the latest front in a multipronged standoff between Washington and Beijing, one that encompasses disputes over trade, intellectual property, naval lanes, and much else.
In that broader context, focusing on Huawei may appear, at first glance, to be a narrow lens. 

After all, the company makes telecom gear that its critics can buy elsewhere. 

But what happens to Huawei matters—for China and the world. 

One of Beijing’s top goals is transforming China into a technology powerhouse able to innovate and control the vital know-how powering future industries, and to free itself from, and then challenge, the United States. 

Huawei, as one of China’s most prominent global enterprises, will be a key part of that quest. 

Hence, its problems are China’s problems, and the fate of the company could foreshadow the fate of the country.
Huawei has always insisted that it has never had ties to the Chinese government or military. 

Still, its critics remain unconvinced. 

The suspicion that Huawei is a threat to American national security has become indelibly marked on the minds of many Americans. 

Sales of its major equipment in the United States have been stymied, its acquisitions of American assets have been blocked, and President Donald Trump’s administration, determined to defend American technology, has taken an especially hostile position on the company.
All of that, to a degree, is Huawei’s own fault. 

The problem starts with its mysterious corporate culture, which has left policy makers and security experts hazy about its background and intentions.
Huawei markets itself as a miracle of modern entrepreneurship, a rags-to-riches fairy tale of a regular guy who launched a business empire on hard work and chutzpah. 

In the company’s narrative, its founder, Ren Zhengfei, was a mere soldier-engineer who, after leaving the military, started Huawei in 1987 with no government connections, state aid, personal wealth, or experience in telecommunications. 

Somehow, despite this lack of expertise and resources, Ren managed to bring a complex technical system to market in a mere handful of years, an impressive achievement in what was then a decidedly low-tech China. 

Officially, the company is owned by its employees, who vote in their own management team. 

Ren, whom the company calls its “natural person shareholder,” controls only 1.4 percent of Huawei but has served as its chief executive for 30 years, and his daughter, the arrested Meng, now helps him run the company.
But Ren has done a miserable job of selling this extravagant myth.

As Huawei has risen to worldwide fame, he remains an enigma. 

Rarely appearing in public, he has made little effort to refute his critics or build confidence in himself and his company. 

Though other Huawei executives reach out to an international audience here and there—as Hu did on Tuesday—Ren mostly delegates the talking to lobbyists and public-relations officers.
On the rare occasions he has personally tried to influence public opinion, he seems to only reinforce his persona. 

In 2012, Ren met with members of a U.S. congressional committee, but they came away frustrated with incomplete answers and information. 

Based on how he responded to questions during a public interview at the World Economic Forum in 2015, it’s not hard to see why. 

Asked point-blank if his company had links to the Chinese government or military, Ren never offered the requisite, emphatic “No,” and broke into a roundabout response, saying: “There’s no need to exert ourselves to explain who we are.”
Eric Harwit, an Asian-studies professor at the University of Hawaii at Manoa and the author of the book China’s Telecommunications Revolution, argues that Huawei’s fortunes have been damaged by Ren’s inability to schmooze and sell.

“You need a Jack Ma who can stand up with Trump and shake hands, and Trump can say you’re a great guy,” Harwit said, referring to the effusive founder of the Chinese e-commerce firm Alibaba. “They don’t have a Jack Ma.”

Compounding Huawei’s woes is a history of suspicious behavior. 

American companies, including Cisco Systems, have accused Huawei of pilfering their intellectual property. 

Now comes the Meng case, which, according to Harwit, “puts Huawei in the headlines.”
“You jump from sanctions violations to what kind of company is Huawei overall,” he said. 

“Are they some kind of evil company that is doing the bidding of the Chinese government no matter what?”

With nearly $93 billion in revenues in 2017, Huawei has done business successfully with a wide range of countries. 

Yet distrust of Huawei is spreading. 

New Zealand and Australia recently barred it from providing the equipment for cutting-edge 5G cellular networks.
This widening concern about Huawei is representative of increasing wariness of China. 

The more assertive Beijing has become in pressing its diplomatic and economic goals—from its state-led ambitions to conquer world manufacturing to the sizable expansion of its military capabilities—the more threatening a rising China has appeared. 

Foreign governments are, in response, standing in China’s path. 

Both the United States and the European Union have introduced new policies to more carefully scrutinize foreign investments, an effort clearly aimed at keeping high-tech know-how out of Chinese hands. 

In Malaysia, Prime Minister Mahathir Mohamad recently halted high-profile infrastructure projects backed by Beijing while warning of a new “colonialism.”
In the Huawei case, American security experts fret that in China, where the distinction between state and society is, at best, blurred, intelligence services could and would exploit the company’s equipment, no matter what its executives promise. 

“Most of it is a China problem, and it’s gotten worse,” William Reinsch, a senior adviser in international business at the Center for Strategic and International Studies in Washington, D.C., said of Huawei’s issues. 

“If Huawei was an Indian company, I think that the attitude toward it would be very different.”
Thus China and Huawei are in a reinforcing loop of escalating distrust. 

The difficulties the company is facing in the United States and elsewhere should be a signal to Beijing’s top leadership that it needs to do more to ease fears about its ascent and ambitions. 

If not, both could find doors closing that they badly need open.
At the two-hour-long press conference at the company’s campus in Dongguan, Hu declined to comment on Meng’s legal situation, instead arguing that Huawei’s sales figures offered proof of how much its customers trusted it. 

Still, even at the briefing, the company could stomach only so much openness. 

Though television correspondents were invited, their cameras were not.
It was probably too little, too late anyway.
“They made a huge foray a while back to try to change their image here and it didn’t work,” Reinsch noted, referring to a past Huawei public-relations effort. 

Now, he added, “I don’t think it is possible.”

China's Economic Malfeasance

The Huawei arrest is a gloriously stinging rebuke to Xi Jinping

By Tom Rogan

Canada's arrest of Huawei Chief Financial Officer Meng Wanzhou is a stinging rebuke of Xi Jinping's Chinese government. 

It exposes China's economic malfeasance and undercuts Xi's global economic agenda.
While it's not clear why Meng has been detained, we do know that it is on request of U.S. federal authorities in New York. 

Suspicion has therefore risen that Meng might be accused of circumventing U.S. sanctions on Iran or North Korea. 

We'll get more information next week. 

Regardless, by challenging China's version of Apple Inc. in such an overt manner, the U.S. government is sending a clear signal to Beijing that it will no longer tolerate China's global economic misconduct.
The U.S. is motivated by two underlying challenges here. 

First, the fact that companies like Huawei would lack their economic power without the support of China's industrial-scale intellectual property theft. 

Led by China's intelligence services, these efforts pose a long term challenge to American prosperity.
Then there's Huawei's role in essentially operating as a front company for Chinese intelligence. 

While Huawei absurdly claims that it is a private sector entity that exists simply to sell goods and services and make profits, the reality is far different. 

In fact, Huawei serves Xi's economic strategy of market domination and competitor displacement, and operates as a front for espionage. 

There is a reason that top U.S. allies have heavily restricted Huawei from tendering on major telecommunication contracts. 

They want to prevent China from establishing massive signal intelligence infrastructure on their soil.
To be sure, China sees things differently. 

Its foreign ministry says that Meng's "detention without giving any reason violates a person's human rights. We have made solemn representations to Canada and the U.S., demanding that both parties immediately clarify the reasons for the detention, and immediately release the detainee to protect the person's legal rights."
I say, too bad.
Meng will be subject to the fair and accountable processes of Canadian and U.S. law. 

And in that, she is far luckier than many of her fellow citizens back home. 

But ultimately this is good news. 

It's long past time that Chinese feudal aggression met some pushback.