By Ronald Kato
The arrest of Meng Wanzhou, the Chief Financial Officer of Chinese telecom giant, Huawei was seen by some analysts as a new escalation in the China-US trade spat. Meng who has since last December been freed on bail, was arrested by Canadian authorities at the request of the United States.
She is accused of violating U.S sanctions stemming from Huawei’s alleged business dealings with the Islamic republic of Iran. Her arrest roiled financial markets and complicated efforts to resolve a bitter trade war dispute between the US and China, the world’s two largest economies.
The context of her arrest is of enormous importance. The US rarely arrests senior business people, nationals or foreigners, for crimes allegedly committed by their companies. This was a serious break from practice and it got Beijing upset.
While the US should be concerned that a company like Huawei would abuse its sanctions on Iran, arresting Meng was a miscalculation and in many ways hypocritical.
Since 2010, over 10 banks including JP Morgan Chase have been fined billions of dollars for violating US sanctions on Cuba, Iran and some on Sudan. Yet no single CEO was whisked off a plane and thrown into custody like Meng was. In all these cases, only corporations and not individual managers were held accountable.
In Beijing, and rightly so, Meng’s arrest has been interpreted as another chapter in the Donald Trump administration’s manual on how to stop China’s economic rise. The foreign affairs ministry has used extremely tough language, even warning of ‘consequences’ since news of Meng’s arrest broke.
Why Huawei matters to China
In August this year, Huawei surpassed Apple to become the world’s second largest smartphone maker.
It was the first time in eight years that the US tech giant had not been the number one or two smartphone company in terms of market share.
Figures from the International Data Corporation (IDC), show that Huawei delivered shipments of 54.2 million units to move into the second position, behind Samsung, with a record high market share of 15.8%.
The Shenzhen based company achieved this unprecedented success even when it is largely locked out of the US market. But Huawei’s fortunes have made it a target of the West to slow China’s dominance in high-end technology. To stop Huawei is to stop China.
The company is Beijing’s poster child when it comes to opening up and reforming technology and telecommunications. Put simply, China will not accept what it deems unfair practices to sabotage Huawei.
Huawei’s 5G technology success
Huawei has beaten the United States, Japan, European countries and South Korea in testing and deploying 5G mobile telecommunications networks. 5G is touted as the technology to drive the world’s economy in the next decade.
Because of the power it represents, tech watchers have referred to it as a strategic resource. But Huawei’s efforts to roll out the technology have been resisted in almost everywhere outside China- thanks to the US.
Washington has claimed, without evidence, that the company is dangerously close china’s rulers and that its hardware and software could be exploited by Beijing to spy on countries and individuals. The US has told its allies to abandon dealings with Huawei.
Australia is the country latest to cancel a deal with Huawei to provide equipment for Sydney’s 5G wireless network.
China’s Artificial Intelligence (A.I) goals
In 2017, Chinese president Xi Jinping unveiled the 2030 vision where Beijing aims, among other things, to leapfrog the as global leader in Artificial Intelligence. The country aims to build an artificial intelligence worth $1trillion by 2030.
AI means technologies which perform tasks that are characteristic of human intelligence such as understanding language and recognising objects and sounds.
In fact artificial intelligence is one of the areas China has maintained are non-negotiable in the ongoing trade talks between the world’s two leading economies. The other is ‘Made in China 2025.
By seeking to curtail China, the US is seeking to protect its own tech juggernauts. The likes of Google, Apple, IBM and Microsoft. China, to its credit, has also built its own tech heavyweights such as Tencent, Baidu and Alibaba. As these are starting to venture out of China, the west is watching closely and devising ways to stop them.
AI sits at the heart of China’s ‘new economy’. One that is technology, service driven as opposed to manufacturing.
Thankfully, Beijing knows that Meng’s arrest and the blackmail of Huawei has got more to do with geopolitics than rule of law.
The writer is a journalist and a China-Africa Press Centre Fellow