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China tries to balance anger over Huawei arrest and trade ties
Published on: 2018-12-10
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030China’s leadership is trying to strike a delicate balance between outrage and necessity, as it seeks to maintain a recent thaw with the United States while lashing out at the arrest of a top executive of Huawei.

That balancing act was on display in Beijing on Sunday, as the Chinese government said it had summoned the American ambassador to China, Terry Branstad, to protest the arrest of Meng Wanzhou, the chief financial officer of the Chinese electronics giant Huawei and the elder daughter of its founder.

033Earlier in the day, People’s Daily warned of “serious consequences” against the Canadian authorities who arrested Ms. Meng on an American warrant. She was detained in Canada more than a week ago on suspicion of fraud involving violations of United States sanctions in Iran.

But at a high-level conference on Sunday at Tsinghua University in Beijing that included four Nobel laureates in economics from the United States, a senior adviser to the Chinese leadership opened his remarks by praising the two countries’ broader economic relationship and avoiding any mention of the arrest.

034Beijing has taken a series of steps to improve trans-Pacific relations since President Trump and President Xi Jinping called a truce in their trade war at the end of the Group of 20 summit meeting in Buenos Aires; Ms. Meng was detained on the same day.

China’s leaders are coincidentally preparing to observe this month the 40th anniversary of the country’s post-Mao economic overhaul by calling for a series of moves to open up the economy to more trade and foreign investment, people familiar with Chinese policymaking said.

031The anniversary, heavily promoted in official propaganda and the subject of Sunday’s conference at Tsinghua University, offers Mr. Xi a chance to take market-opening measures sought by the United States without seeming to give in to American pressure.

The final list of moves is still the subject of considerable discussion within the Chinese bureaucracy. But some options under serious consideration include further reducing tariffs on imports from all over the world and encouraging broader foreign investment in the slowing Chinese economy.

China made some moves in these directions this year, however, and it is unclear how much further the Beijing leadership is willing to go. By Beijing’s calculation, China’s average tariffs have already fallen to 7.5% from 9.8% at the start of this year. By comparison, average tariffs in the United States are 3.5%, while the European Union’s are 5%.

Ms. Meng’s detention has considerably complicated China’s economic relations with the United States. It has ignited anger and astonishment in China, where Huawei, one of the country’s largest and most internationally successful private companies, is a source of national pride.

At a bail hearing on Friday in Vancouver, British Columbia, where Ms. Meng was arrested on December 1st while changing planes, Canadian prosecutors said that she had taken part in a scheme to trick financial institutions into making transactions that violated American sanctions against Iran.

032A Canadian judge then issued a warrant for Ms. Meng on November 30, after it became known that she would change planes in Vancouver on her way to Mexico from Hong Kong. By the end of Friday, no bail had been set. The hearing is set to continue on Monday morning.

Huawei has said it has no knowledge of wrongdoing by Ms. Meng. In a statement released after the hearing on Friday, a company spokesman said, “We have every confidence that the Canadian and U.S. legal systems will reach the right conclusion.”

The United States government has been looking into Huawei’s business in Iran for years. After investigating sanctions violations by Huawei’s main Chinese rival, ZTE, the Commerce Department issued heavy fines and required it to replace its senior leadership.

But coming in a year of tariffs and other measures aimed at curbing China’s efforts to upgrade its technological capabilities, Ms. Meng’s arrest has reinforced the feeling among many people in China that Washington is using every means at its disposal to hold back their nation’s economic ascent. That feeling makes it harder for economic reformers in China to support trade compromises with the United States.

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