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Why This Woman's Arrest Is Causing Markets to Tank

Newser — John Johnson

The arrest of a Chinese tech executive rattled already jittery world markets Thursday and brought international attention to her company, Huawei Technologies. The woman in custody is its 46-year-old chief financial officer, Meng Wanzhou, who also goes by Sabrina Meng.

China is seething over the arrest, which took place at the request of American authorities at Vancouver International Airport in Canada on Dec. 1. The news comes days after the US and China declared a temporary truce in their trade war and threatens to throw a wrench into already complicated negotiations.

Some basics:

  • Why? Canadian authorities arrested Meng over alleged violations of American trade sanctions on Iran, reports the Globe and Mail. The charges have not been specified, and the Justice Department has not commented.

Earlier this year, US authorities began investigating the company over allegations that it was shipping "US-origin" products to Iran in violation of the sanctions, reports Reuters.

  • What is Huawei? Meng's company is a huge player in the global telecom industry.

It is the second-biggest maker of cellphones and the world's No. 1 supplier of telecom network equipment, reports the AP. The company was founded by Meng's father, Ren Zhengfei, a former military engineer.

  • Spying concerns: Huawei wants to be a major provider of technology for the coming 5G wireless internet around the world, but so far the US, Britain, Australia, and New Zealand have barred the company from taking part in any of the trials in those nations, reports Al Jazeera.

The concern? That Huawei will use its gear to spy for China. The company denies the government has any sway over its operations.

  • Meng's rise: Founder Ren, 74, has apparently been grooming Meng to take over the business, and the Wall Street Journal charts her rise within the company.

She recently was put on par with three men also in the running, a turnabout from Ren's statement in 2013 that his successor would not be a family member.

  • Gloves are off: The previous Obama administration also indicted Chinese citizens on such charges, but it "was reluctant to take more drastic action such as arresting the individuals in third countries, over fear that Beijing would retaliate against US interests in China or in other countries," Eurasia Group analysts write in a note cited by CNN.

The arrest "suggests that the gloves are now fully off in this arena."

  • What next? Meng faces extradition to the US, and the next steps could determine whether US-China relations get better or worse.

Earlier this year, the US caught ZTE, another Chinese firm, breaching sanctions and ultimately let it off with a fine and a warning. Meng is a bigger test.

The US "is looking like the dog that caught the car," writes Tim Culpan at Bloomberg. The White House and Justice Department must decide what they want out of this case, and "it's not clear that they know."

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