On September 25, nearly three years after Canada detained Huawei Technologies Co.'s Chief Financial Officer Meng Wanzhou on behalf of the United States, the U.S. Department of Justice allowed her to return to China, thereby eliminating a factor that causes the deterioration of U.S.-China relations.

According to an agreement reached in Brooklyn federal court on Friday, Meng admitted wrongdoings. In exchange, prosecutors postponed and later dropped charges of wire fraud and bank fraud against her.

Meng admitted that in 2013, she made untrue statements to HSBC about Huawei's business interests in Iran, causing the bank to provide services that violated sanctions imposed by the U.S. against Iran.

Some U.S. national security experts who urge the U.S. to take a tougher stance against China say that they see this agreement as a surrender and will be used by the Chinese government. Matt Turpin, a former China director of the Trump Administration’s National Security Council, said he believes that Beijing will consider hostage-taking to be effective and that Washington will succumb under pressure. The agreement to release Meng may come under fire in the U.S. Congress. Some Republicans have accused the Biden administration of being too lenient with Huawei compared with former President Donald Trump. U.S. Secretary of Commerce Gina Raimondo told The Wall Street Journal that the Department of Commerce will continue its efforts to prevent Huawei from acquiring advanced chips.

Huawei does not participate in Meng’s agreement, and will continue to defend the allegations faced by the company, but prosecutors can use Meng's admission to deal with the company. At the same time, Canadian Prime Minister Justin Trudeau told reporters that two Canadian citizens detained by the Chinese government for more than 1,000 days have left Chinese airspace and will arrive in Canada early Saturday.

Although Beijing insisted there is no connection between the two cases, Trudeau's Liberal government accused China of engaging in hostage diplomacy. Trudeau was not asked whether the two countries had struck a bilateral deal. "I want to thank our allies and partners around the world in the international community who have stood steadfast in solidarity with Canada and with these two Canadians," he said.

ANBOUND’s interpretation:

The release of the two Canadians and Meng Wanzhou at the same time could be taken by the outside world as a confirmation of the accusation of "hostage diplomacy" against China. The impact of this on China’s international reputation is huge.

Meng substantially admitted the charges against her by the U.S. Department of Justice and related incidents did occur. If the U.S. and Huawei continue to confront over this issue in the future, the focus will be that the incidents “did happen”. However, due to the change of Meng's attitude, Huawei will undoubtedly be in a passive situation.

On the whole, China has almost lost all in this deal, and the only visible benefit may lie in its domestic publicity. The motive behind this decision is probably to reduce the damages, i.e. preventing Meng from being extradited to the U.S. to cause further harm.