WASHINGTON - The U.S. State Department on Thursday renewed its warning for U.S. citizens traveling in China to exercise increased caution due to “arbitrary enforcement of local laws” amid heightened diplomatic tensions over the arrest in Canada of a Chinese technology company executive.
The updated travel advisory maintains the warning at “Level 2” but also warns about extra security checks and increased police presence in the Xinjiang Uighur and Tibet Autonomous Regions.
The advisory follows the detentions by Chinese authorities in December of Canadians Michael Kovrig, a former diplomat and an adviser with the International Crisis Group (ICG) think-tank, and businessman Michael Spavor. China says both men were suspected of endangering state security.
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Tensions with China increased after Canadian police arrested Huawei Technologies Co Ltd’s chief financial officer, Meng Wanzhou, on Dec. 1 in Vancouver at the request of the United States.
U.S. prosecutors have accused her of misleading banks about transactions linked to Iran, putting the banks at risk of violating U.S. sanctions.
Earlier on Thursday, China’s top prosecutor said the two Canadians had “without a doubt” violated the law.
In its previous travel advisory for China issued on Jan. 22 last year, the State Department urged Americans to “exercise increased caution” in the country because of “the arbitrary enforcement of local laws and special restrictions on dual U.S.-Chinese nationals.”
The latest advisory repeats that warning but adds: “Extra security measures, such as security checks and increased levels of police presence, are common in the Xinjiang Uighur and Tibet Autonomous Regions. Authorities may impose curfews and travel restrictions on short notice.”
The advisory also warns about China’s use of “exit bans” that would prohibit U.S. citizens from leaving the country, sometimes keeping them in China for years.
HONG KONG/SHANGHAI - At a closed-door security meeting of U.S. companies in Singapore on Thursday, one topic was high on the agenda: the arrest of a top executive at Chinese tech giant Huawei [HWT.UL] and the potential backlash on American firms operating in China.
The Huawei logo is pictured outside their research facility in Ottawa, Ontario, Canada, December 6, 2018. REUTERS/Chris Wattie
Officials from major U.S. companies who attended the event, a scheduled meeting of the local chapter of the U.S. Department of State’s Overseas Security Advisory Council (OSAC), voiced concerns about retaliation against American firms and their executives, two people with knowledge of the meeting said.
A number of attendees said their companies were considering restricting non-essential China travel and looking to move meetings outside the country, one of the people added.
Security executives for companies including Walt Disney Co, Alphabet Inc’s Google, Facebook Inc, and PayPal Holdings Inc attended the meeting, according to the sources and a LinkedIn posting by one of the attendees.
The companies all declined to comment or did not immediately respond to requests for comment.
The discussions at the meeting underscore concerns rippling through U.S. businesses in the world’s second largest economy, already facing a delicate balancing act amid a tense trade standoff between Washington and Beijing.
The formal agenda for the meeting, held at Google’s Asia-Pacific headquarters in Singapore, included presentations on economic crime and terrorism in the region. OSAC promotes “security cooperation between American private sector interests worldwide and the U.S. Department of State,” according to its website.
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But conversation soon turned to possible risks in China prompted by the arrest of Meng Wanzhou, the chief financial officer and “heiress” of Chinese telecom network equipment giant Huawei Technologies Co Ltd, who was detained in Canada on Dec. 1. The news of the arrest was made public on Wednesday.
Meng, the daughter of Huawei’s founder, was held at Washington’s request as part of a U.S. investigation of an alleged scheme to use the global banking system to evade U.S. sanctions against Iran, people familiar with the probe said.
The arrest has roiled global markets amid fears that it could further inflame the Sino-U.S. trade row.
Risk consultants and analysts said that the arrest could prompt Beijing to retaliate in some form.
“This will pressure a lot of Chinese officials to look strong in this dispute,” said Nick Marro, Hong Kong-based Asia analyst at the Economist Intelligence Unit, who added that technology companies were particularly at risk.
“This could mean either taking a stronger stance on trade negotiations, or taking a stronger stance on U.S. tech firms in China right now.”
Asked whether there would be any retaliation against any foreign executives in China, Foreign Ministry spokesman Geng Shuang said on Friday China has always protected the lawful rights of foreigners in China in accordance with the law.
“Of course in China they should respect China’s laws and rules.”
EARLY CHRISTMAS TRIP?
OSAC says it is made up of 34 private and public sector member organizations. It lists its events on its website, including the Dec. 6 meeting in Singapore. There was also a separate listed meeting held in Shanghai on the same day.
Prashant Nayak, Disney’s Asia Pacific director of corporate security, posted about the Singapore meeting on LinkedIn, tagging other executives at Google, Facebook, Amazon.com Inc, Marriot International Inc, Microsoft Corp and others. Nayak did not respond to a LinkedIn message seeking further comment.
The second person with knowledge of the event said the Huawei arrest and potential fallout was a hot topic at the meeting.
A senior diplomat from the U.S. embassy in Singapore gave opening remarks, but an embassy spokesperson said she left before any discussion.
Asia-based risk consultants said they had seen a rise in the number of clients asking about the Huawei issue and potential concerns related to the impact on U.S. firms in China.
Jakob Korslund, CEO of Singapore-based consultancy Deutsche Risk, said his firm had received a number of enquiries in the last two days asking about the risks of traveling to China.
“For a few we have advised postponing trips that were not time critical, telling clients to wait for the next few weeks to see the situation,” he said.
James McGregor, chairman of APCO Worldwide’s Greater China region, said companies would likely err on the side of not sending executives to China for the time being.
“It’s all about avoiding risk, because what do you do if somebody is arrested?” he told Reuters, adding anxiety was also spreading among executives already in China.
“People are joking about it a little bit and saying ‘maybe I should take an early Christmas trip home’.”
VANCOUVER/BEIJING - The daughter of Huawei’s founder, a top executive at the Chinese technology giant, was arrested in Canada and faces extradition to the United States, roiling global stock markets as it threatened to inflame Sino-U.S. trade tensions afresh.
The shock arrest of Meng Wanzhou, 46, who is Huawei Technologies Co Ltd’s chief financial officer, raises fresh doubts over a 90-day truce on trade struck between Presidents Donald Trump and Xi Jinping on Saturday - the day she was detained.
Her arrest, revealed late on Wednesday by Canadian authorities, is related to U.S. sanctions, a person familiar with the matter said. Reuters was unable to determine the precise nature of the possible violations.
The arrest and any potential sanctions on the world’s second biggest smartphone maker could have major repercussions on the global technology supply chain. Shares in Asian suppliers to Huawei, which also counts Qualcomm Inc and Intel among its major suppliers, tumbled on Thursday.
Huawei is already under intense scrutiny from U.S. and other western governments about its ties to the Chinese government, driven by concerns it could be used by the state for spying. It has been locked out of the U.S. and some other markets for telecom gear. Huawei has repeatedly insisted Beijing has no influence over it.
Meng, one of the vice chairs on the company’s board and the daughter of company founder Ren Zhengfei, was arrested on Dec. 1 at the request of U.S. authorities and a court hearing has been set for Friday, a Canadian Justice Department spokesman said. Trump and Xi had dined in Argentina on Dec. 1 at the G20 summit.
Sources told us at Reuters in April that U.S. authorities have been probing Huawei, the world’s largest telecoms equipment maker, since at least 2016 for allegedly shipping U.S.-origin products to Iran and other countries in violation of U.S. export and sanctions laws.
Huawei, which generated $93 billion in revenue last year, confirmed the arrest in a statement. “The company has been provided very little information regarding the charges and is not aware of any wrongdoing by Ms. Meng,” it said.
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She was detained when she was transferring flights in Canada, it added.
Chinese foreign ministry spokesman Geng Shuang told a daily briefing on Thursday that China had asked Canada and the United States for an explanation of Meng’s arrest, but they have “not provided any clarification”.
The Chinese consulate in Vancouver has been providing her assistance, he added, declining further comment. On Wednesday, China’s embassy in Canada said it resolutely opposed the arrest and called for her immediate release.
In April, the sources told at Reuters that the U.S. Justice Department probe was being handled by the U.S. attorney’s office in Brooklyn.
The U.S. Justice Department on Wednesday declined to comment. A spokesman for the U.S. attorney’s office in Brooklyn also declined to comment.
FILE PHOTO: Meng Wanzhou, Executive Board Director of the Chinese technology giant Huawei, attends a session of the VTB Capital Investment Forum "Russia Calling!" in Moscow, Russia October 2, 2014. REUTERS/Alexander Bibik
‘EXTREMELY SHOCKING’
Lu Xiang, an expert on China-U.S. relations at the state-backed Chinese Academy of Social Sciences, said the arrest of Meng is “extremely shocking”.
“If someone from the United States is hoping to use threats to an individual’s personal safety in order to add weight in the talks, then they have most certainly miscalculated,” he said.
“I believe that China’s government will use maximum force to fight for freedom and justice for Meng Wanzhou.”
Arthur Kroeber, founder of Gavekal Dragonomics, said it was unlikely that Beijing would retaliate against the local U.S. business community, whose interests have partly overlapped with China’s in the trade war and been a source of leverage for Beijing.
“You can play hardball with a small country but you can’t do it with the U.S.,” he said. “Actually it hurts them to make life difficult” for U.S. companies.
A user of China’s Twitter-like Weibo platform said Chinese should boycott products made by U.S. tech giant Apple Inc and instead buy Huawei products to show support for one of China’s national champions.
However, the topic ranked only 31st among trending items on Weibo as of Thursday afternoon, with many discussion threads apparently blocked, which is not unusual on China’s heavily censored Internet.
Jia Wenshan, a professor at Chapman University in California, said the arrest “runs a huge risk of derailing the U.S.-China trade talks”.
While Meng’s arrest comes at a delicate time in U.S.-China relations, it was not clear if the timing was coincidental.
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The probe of Huawei is similar to one that threatened the survival of China’s ZTE Corp, which pleaded guilty in 2017 to violating U.S. laws that restrict the sale of American-made technology to Iran.
Earlier this year, the United States banned American firms from selling parts and software to ZTE, which then paid $1 billion this summer as part of a deal to get the ban lifted.
Huawei has said it complies with all applicable export control and sanctions laws and U.S. and other regulations.
News of the arrest came the same day Britain’s BT Group said it was removing Huawei’s equipment from the core of its existing 3G and 4G mobile operations and would not use the Chinese company in central parts of the next network.
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HONG KONG CONNECTION
In January 2013, Reuters reported that Hong Kong-based Skycom Tech Co Ltd, which attempted to sell embargoed Hewlett-Packard computer equipment to Iran’s largest mobile-phone operator, had much closer ties to Huawei than previously known.
Meng, who also has used the English names Cathy and Sabrina, served on the board of Skycom between February 2008 and April 2009, according to Skycom records filed with Hong Kong’s Companies Registry.
Several other past and present Skycom directors appear to have connections to Huawei.
Meng’s arrest drew a quick reaction in Washington.
U.S. Senator Ben Sasse praised the move and said that it was “for breaking U.S. sanctions against Iran.” He added: “Sometimes Chinese aggression is explicitly state-sponsored and sometimes it’s laundered through many of Beijing’s so-called ‘private’ sector entities.”
U.S. stock futures and Asian shares tumbled as news of the arrest heightened the sense a major collision was brewing between the world’s two largest economic powers, not just over tariffs but also over technological hegemony.
Shares of Huawei suppliers slumped on Thursday as investors fretted over the arrest. Samsung Electronics fell 2.3 percent, while Chinasoft International Ltd sank as much as 13 percent.
