China targets Canada after Vancouver police detain high level tech executive

China again protested severely against the arrest of an executive of telecom giant Huawei Canada. Meng Wanzhou, the Chief Financial Officer of Huawei was arrested on December 1 in Vancouver on a US arrest warrant. She faces US fraud charges related to alleged sanctions-breaking dealings with Iran.

Huawei CFO Meng Wanzhou Reuters

China has rejected the claims, and warned Canada of “grave consequences” if Meng is not released on bail for health reasons, calling her treatment “inhumane.”

The relations have been fragile since Beijing and Washington launched a trade war, imposing tit for tat tariffs on each other worth billions of dollars.

The case of Huawei’s CFO will have to be handled very carefully if what’s left of the relationship is to be preserved.

“The Chinese government would be looking at all the range of options that they may have,” says Steve Tsang, head of China studies with SOAS, the School for Oriental and African Studies, in London.

“What it does reveal is that the Chinese government will not take some actions in response to it, because they are rather worried about the relationship with the United States."

“Therefore they are focusing on punishing Canada rather than the US.

Measures could consist of restrictions on “Canadian business people operating in China, or limiting trade with Canada,” he says.

Mixed reactions to sanctions against Iran

The core of the current friction between Washington and Beijing are US accusations that Huawei violated US sanctions against Iran.

“The use of a company which was previously under the control of Huawei to export technology originated from the United States to Iran,” says Tsang.

“I don’t think it is the kind of technology that necessarily tips the balance of developments in Iran,” he says.

But it shows that the Trump administration is taking a very hardline position against Iran, and therefore the export of technology from the US to Iran via China.

One of the results of the Washington’s persisent blacklisting of Iran is that Iran looks east, to Russia and China, to find compensation for trade it misses out on.

Where does Europe fit in?

The US is the only country to have walked away from the Joint Comprehensive Plan of Action, or “nuclear deal” that was signed in 2015 between Iran and the “P5+1” (the five permanent members of the UN Security Council – the US, Russia, China, France and the UK + Germany) and that allowed a lifting of sanctions in exchange for Iran slowing down its nuclear ambitions.

“The US is putting pressure on its allies to stop the export of technology or indeed trade with the Iranian government,” says Tsang.

“That is causing problems for the Iranian economy. This is something that most European countries disagree with.

“But then, the Trump administration is the Trump administration, and it does what it wants.” he concludes.