Asian markets fell sharply after Canadian authorities arrested Huawei’s chief financial officer on allegations of violating U.S. sanctions against Iran.
Investors who had hoped the recent G20 summit would ease U.S.–China trade tensions were disappointed by the arrest. Markets had reacted positively to the truce announced by President Trump following his meeting with China’s leader, and traders had expected that reprieve to bring greater stability.
Huawei CFO Meng Wanzhou was detained by Canadian police in Vancouver and is facing a possible extradition to the United States. Canadian court proceedings and a publication ban limit the information available about the exact charges, but authorities allege she breached U.S. sanctions on Iran.
The arrest has particular prominence because Meng is the daughter of Huawei founder Ren Zhengfei. Huawei has repeatedly come under scrutiny because of Ren’s past service in China’s People’s Liberation Army, where he reportedly held a rank comparable to a major.
Those past ties have helped prompt several Western governments to restrict or block the use of Huawei equipment in critical telecommunications networks. The United States has long maintained restrictions on Huawei, and Australia banned the company from its 5G networks earlier this year.
In recent weeks the U.S. has intensified efforts to persuade allies to exclude Chinese vendors from next-generation 5G infrastructure. Following those appeals, New Zealand — a fellow “Five Eyes” intelligence partner — moved to block a local carrier from deploying Huawei hardware.
In the United Kingdom, BT/EE announced plans to remove Huawei equipment from its 4G core by 2021 and confirmed it will not use Huawei for its 5G core network. A BT spokesperson said Huawei will remain an important supplier in non-core areas and a partner for innovation.
South Korea’s largest operator, SK Telecom, omitted Huawei from its list of selected 5G vendors, and the company has faced similar exclusionary pressure in other markets. Huawei also publicly denied reports that it had been formally excluded from India’s national 5G trials.
A bail hearing for Meng Wanzhou has been scheduled for Friday.
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