Huawei’s chief financial officer Meng Wanzhou is seen in a portrait photo. China on Thursday, Dec. 6, 2018, demanded Canada release the Huawei Technologies executive who was arrested in a case that adds to technology tensions with Washington and threatens to complicate trade talks. (Huawei via AP)

China ups pressure as bail hearing resumes for top tech exec

VANCOUVER — Ajailed Chinese technology executive waited Monday to see if she’d get released on bail in a case that has raised U.S.-China tensions and complicated efforts to resolve a trade dispute that has roiled financial markets and threatened global economic growth.

Meng Wanzhou, the chief financial officer of Chinese telecommunications giant Huawei and daughter of its founder, was detained at the request of the U.S. during a layover at the Vancouver airport on Dec. 1 — the same day that Presidents Donald Trump and Xi Jinping of China agreed to a 90-day cease-fire in a trade dispute that threatens to disrupt global commerce.

The U.S. has accused Huawei of using a Hong Kong shell company to sell equipment in Iran in violation of U.S. sanctions. It also says that Meng and Huawei misled banks about the company’s business dealings in Iran.

In urging the court to reject Meng’s bail request, Prosecutor John Gibb-Carsley noted the Huawei executive has vast resources and a strong incentive to bolt: She’s facing fraud charges in the United States that could put her in prison for 30 years.

On Monday, David Martin, Meng’s lawyer, said that Meng was willing to pay for a surveillance company to monitor her and wear an ankle monitor. Scott Filer of Lions Gate Risk Management group said his company would make a citizen’s arrest if she breaches bail conditions.

Martin said Meng’s husband would put up both of their Vancouver homes plus $1 million Canadian ($750,000) for a total value of $15 million Canadian ($11.2 million) as collateral.

But Justice William Ehrcke cast doubt on that proposal, saying Meng’s husband isn’t a resident of British Columbia — a requirement for him to act as a guarantor that his wife won’t flee — and his visitor visa expires in February.

Gibb-Carsley added that her husband has no meaningful connections to Vancouver and he only spends two or three weeks a year in the city. The prosecutor also said he is concerned about the use of a security company paid by Meng.

Meng’s arrest has fueled U.S.-China trade tensions at a time when the two countries are seeking to resolve a dispute over Beijing’s technology and industrial strategy. Both sides have sought to keep the issues separate, at least so far, but the arrest has roiled markets, with stock markets worldwide down again Monday.

The hearing has sparked widespread interest, and the courtroom was packed again Monday with media and spectators, including some who came to support Meng. One man in the gallery brought binoculars to have a closer look at Meng, while outside court a man and woman held a sign that read “Free Ms. Meng.”

Over the weekend, China’s Vice Foreign Minister Le Yucheng summoned Canadian Ambassador John McCallum and U.S. Ambassador Terry Branstad.

Le warned both countries that Beijing would take steps based on their response. Asked Monday what those steps might be, Chinese Foreign Ministry spokesman Lu Kang said only that “it totally depends on the Canadian side itself.”

The Canadian province of British Columbia has already cancelled a trade mission to China amid fears China could detain Canadians in retaliation for Meng’s detention.

Stocks around the world fell Monday over investor concerns about the continuing U.S.-China trade dispute, as well as the cloud hanging over Brexit negotiations after Britain’s prime minister postponed a vote on her deal for Britain to exit the European Union. In the U.S., stocks were volatile, tumbling in the morning and then recovering ground in the afternoon.

The Huawei case complicates efforts to resolve the U.S.-China trade dispute. The United States has slapped tariffs on $250 billion in Chinese imports, charging that China steals American technology and forces U.S. companies to turn over trade secrets. Tariffs on $200 billion of those imports were scheduled to rise from 10 per cent to 25 per cent on Jan. 1.

But over dinner Dec. 1 with Xi in Buenos Aires, Argentina, Trump agreed to delay the tariff increase for 90 days, buying time for more negotiations.

Bill Perry, a trade lawyer with Harris Bricken in Seattle, said China’s decelerating economy is putting pressure on Xi to make concessions before U.S. tariffs go up. “They need a trade deal. They don’t want the tariffs to go up to 25” per cent, said Perry, who publishes the “US China Trade War” blog. “This is Damocles’ sword hanging over the Chinese government.”

Huawei, the biggest global supplier of network gear for phone and internet companies, has become the target of U.S. security concerns because of its ties to the Chinese government. The U.S. has pressured other countries to limit use of its technology, warning they could be opening themselves up to surveillance and theft of information.

Lu, the Foreign Ministry spokesman, accused unnamed countries of hyping the “so-called” threat. “I must tell you that not a single piece of evidence have they ever presented to back their allegation,” he said. “To create obstacles for companies’ normal operations based on speculation is quite absurd.”

Canadian officials have declined to comment on Chinese threats of retaliation, instead emphasizing the independence of Canada’s judiciary and the importance of Ottawa’s relationship with Beijing.

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