The "Meng Wanzhou incident" has brought uncertainty to the recently suspended escalation of U.S.-China trade war, which also causes great challenges to the "90-day consensus" of China and the United States to ease trade frictions.
The Chinese Department of Foreign Affairs has already strongly protested this and hopes that the United States and Canada will properly handle the matter. It is worth noting that this incident is igniting a wave of nationalist populism in China. If the incident ends in the worst case scenario for Huawei and China, which is Meng Wanzhou being extradited to the U.S. and severely sentenced by the U.S. court, and that Huawei being imposed with huge amount of fine, then rejected by many countries on the grounds of "national security", then China's wave of public opinion will continue to surge, turning into intense social discussion and domestic political pressure. If things develop to this point, one cannot rule out the possibility that the consensus reached by the G20 talk between China and the United States would be subverted.
This result may be what some political forces in the United States would like to see, and it is also what some Chinese with extremist nationalist inclination hope to happen, but what is certain is that this result will cause considerable losses to the economic interests of both China and the United States, and will have a greater negative spillover effect when it combines with the reversal of globalization.
To rationally deal with the "Meng Wanzhou incident", there should be a rational understanding and objective analysis of the background and the nature of this incident.
Judging from the information disclosed so far, the reason for this is that the U.S. judicial investigation believes that Huawei has violated the U.S. ban on sanctions against Iran, and using its Hong Kong-based firm to conduct illegal financial transactions with Iran. According to a source from the Wall Street Journal, one reason why Meng Wanzhou was targeted by the United States was that a federally appointed overseer of HSBC Holdings was responsible for evaluating HSBC's anti-money laundering and sanctions controls in recent years. The overseer provided information to the federal prosecutor in the Eastern District of New York about the Huawei transaction and reported suspicious transactions in the company's account. According to Reuters, the U.S. has been investigating whether Huawei has violated the U.S. sanctions against Iran at least since 2016; the investigation recently included Huawei's use of HSBC Holdings Ltd. for illegal transactions involving Iran. As early as 2012, HSBC had paid US$1.92 billion and signed an extension of the lawsuit agreement with the United States. However, HSBC did not comment on this matter and denied that it was under investigation.
Looking at the "Meng Wanzhou incident" from the perspective of trade war, some analysts believe that the action of the United States against Huawei is similar to the ZTE incident. At the time of the ZTE incident, China and the United States were still testing each other, and ZTE's violations became a bargaining chip for the U.S. Yet, this time the hearing of Meng Wanzhou is also the preparation of the U.S. side to negotiate with China for the next stage. Actually, the purpose of the United States against Huawei is far more than that.
Many professionals have analyzed the incident from the perspective of the legal system, the control of financial field, and the extradition mechanism of the United States. They pointed out that Huawei has lesser chance to win in this "Meng Wanzhou" incident; some in the legal profession are even estimating how many years would the U.S. court sentence Meng Wanzhou. The reason why the United States can implement its own law in other countries lies in its unique hegemony in the world. The world today is still in the "unipolar hegemony" pattern; if a hegemonic country wants to show its strong will in the world, none can stop it. Therefore, concerning the Huawei incident, any interpretation in the law, regardless how detailed, would only be a discussion purely on the technical level; any emphasis on judicial independence would only be a high-sounding institutional reason. A country's judicial system is independent and ultimately serves the fundamental interests of the country. The only difference is that the power transfer mechanisms of different countries are different, and likewise the representation of power is different, so are the power control of the ruling party and the government.
Anbound's researchers point out that the root cause of the U.S. assault on Huawei is actually not complicated; this is in fact part of a series of its international policies of "encirclement" of China. Why did the U.S. select Huawei, after ZTE? Because Huawei is the only large company in China with advanced technology competitiveness, and the only Chinese company that can compete with Western technology companies in 5G. The situation as grasped by Anbound's researchers shows that Huawei has already started 5G testing with the local telecom operator EE in the UK, and the speed has reached the standard. However, British Telecom excluded Huawei from the grounds of "national security", which means Huawei's previous efforts are all wasted. From the perspective of national competition, the U.S. judicial system is cracking down on Huawei by using Canada to detain Meng Wanzhou, the daughter of Ren Zhengfei. Such action is indeed a "dirty approach" as some netizens have mentioned; it is just that such "dirty approach" is disguised in the American legal system.
It is clear that what lies behind the Huawei incident is the suppression of Chinese technology companies by the United States; its fundamental purpose is the U.S.'s aggressive international strategy against China in recent years. The United States' suppression of China's strategic intentions has been made public in the 2018 U.S. National Security Strategy Report, released in December 2017. Just as Anbound has repeatedly stressed, the essence of the trade war is competition for market space. The trade war initiated by the United States is itself not scary; what is more crucial is the stronger pressure from the United States will come from the fields of science and technology, and finance. In this "Meng Wanzhou incident", Huawei happens to be in both fields. The U.S. judicial system hopes that it can "teach Huawei a lesson" through technology and finance.
Currently, the United States has successfully made the Five Eyes, an intelligence alliance comprising Australia, Canada, New Zealand, the United Kingdom and the United States itself, as well as other countries such as Japan and South Korea to exclude Huawei's 5G technology. Some countries such as the United States, the United Kingdom and Australia have excluded all of Huawei's technology, while Japan excludes it from government procurement, and Canada still in the final discretion. However, after the "Meng Wanzhou incident", Canada will definitely reject Huawei. In Europe, the UK and Germany will bid on the 5G technology next year. Undoubtedly, Huawei, the world's largest telecommunications provider, will be the most favorable competitor. However, in November this year, the U.S. delegation visited Europe and made it clear that for security reasons, Europe as an ally of the United States must exclude Huawei from its 5G technology. It can be confirmed that Huawei is experiencing a comprehensive 5G "assault" initiated by the United States. The impact of this attack on Huawei is extremely serious. If it is rejected by the telecom market of major developed countries, Huawei's 5G technology application will face huge restrictions, and Huawei will be severely affected
Anbound's scholars point out that the suppression Huawei by the U.S. is not accidental. The "Meng Wanzhou incident" is not an isolated case, and it will not be the last one. In fact, in the past two years, the U.S. judicial system has increased a series of "assaults" against Chinese multinational companies. On December 5, the jury ruled that former Hong Kong Home Affairs Bureau Director Patrick Ho Chi-ping was convicted in the United States for bribing African officials for a Chinese energy conglomerate to gain oil exploitation rights. On November 19 this year, Chief Justice Colleen McMahon of the Southern District Court of New York issued an order dismissing six Chinese banks, including Agricultural Bank of China, Bank of China, Bank of Communications, China Construction Bank, China Merchants Bank and Industrial and Commercial Bank of China, regarding the cancellation of property investigation orders. The six banks are ordered to execute the property survey order within 28 days from the date of receipt of the order (December 17, 2018). According to the investigation order, these banks must disclose relevant transaction records, including of their head offices in China, to the United States, otherwise all U.S. legal persons and natural persons will be prohibited from doing business with them. At present, almost all China-U.S. trade exchanges rely on these six banks.
This series of seemingly irrelevant cases reveals that in the competition between China and the United States, Chinese multinational companies may become the targets. At the same time, this is also a warning to other Chinese multinational companies active in the world market, that they are likely to go to the American court at any time.
Final analysis conclusion:
How should China establish its fundamental view on U.S.-China relations under the new situation? How should it find a balance in the process of facing the world and achieve something? How should it strive for more development space and time in the current unfavorable environment? All these have become an extremely important strategic judgment issue. Based on the comparison of actual national strength and the maximization of national interests, China needs to carefully select the coping strategies based on the realization of the overall national strategic objectives.
