27 September 2021

That Canada Prisoner Swap Reveals the Depth of Huawei's Beijing Ties

Tim Culpan

In scenes reminiscent of a Cold War prisoner swap, a senior executive at Huawei Technologies Co. was released Friday, just as China allowed two Canadians to return home after 1,000 days in jail. The exchange will be hailed as a victory both in Ottawa and Beijing. But the political maneuvering required to orchestrate this deal undermines Huawei’s claims of independence from government influence.

The company’s chief financial officer, Meng Wanzhou, had been holed up in her Vancouver mansion since December 2018, pending extradition to the U.S. over allegations of fraud. U.S. prosecutors accused her of lying to HSBC Holdings Plc about the company’s dealings with Iran as part of an attempt to violate trade sanctions. Michael Kovrig, a former diplomat and senior adviser to the International Crisis Group, and Michael Spavor, a tourism consultant, were detained in China days after her arrest. Last month, Spavor was sentenced to 11 years in prison for spying, while a verdict against Kovrig hadn’t yet been delivered.

Technically, there was no connection between these cases. From the outset, the U.S. maintained that its charges against Meng were purely legal, despite escalating tensions with China under the presidency of Donald Trump. Canada, meanwhile, was merely heeding an extradition request. China saw the opposite, claiming it was a political attack on a national champion. It didn’t help that Trump said he’d intervene in the case against Meng if it meant he could secure a trade deal with Beijing. In so doing, he turned Huawei into a bargaining chip and allowed the two Michaels, as they are known, to become pawns. (Chinese officials made no secret of this fact.)More from

Many people incorrectly conflate the Meng case — which revolves around sanctions-busting — with U.S. allegations that Huawei equipment is used to help China spy. Such concerns underpin a U.S.-led campaign, waged under Trump, to have Huawei equipment banned and even removed from telecommunications networks globally. Moves by Australia, Japan, Taiwan, the U.K. and Sweden to block the company’s presence on their shores are testament to the success of these efforts. Washington also used national security to justify rules that stopped the supply of critical components and technology to the Shenzhen-based company, crippling its ability to churn out networking equipment and smartphones.

Despite this sustained crusade, the U.S. has struggled to prove a clear connection between Huawei and the Communist Party-led government in Beijing. Founder and Chairman Ren Zhengfei’s time as an engineer for the People’s Liberation Army is among the oft-cited but tenuous facts proffered in support of these claims. And the company has seized on this lack of evidence to fight back.

Ren, who is Meng's father, came out from seclusion after her arrest to chase down anyone who’d listen to his rebuttals. Within weeks of Meng’s detention, numerous journalists were invited to the Huawei campus to meet with Ren. Throughout this flurry of media engagements, his message was consistent: We don’t spy, the customer comes first, and we’re not connected to the government.

“Huawei firmly stands on the side of customers when it comes to cybersecurity and privacy,” Ren told reporters in January 2019. “I don’t see a close connection between my personal political beliefs and the businesses of Huawei.”

But the very fact that China seized Kovrig and Spavor within days of Canada detaining Meng, and the speed with which Beijing linked their cases to hers, shows the importance that it places on Huawei. It’s also evidence of the lengths the government is willing to go to help the nation’s largest telecoms equipment maker and one of its most important executives. At a time when Chinese tech giants and billionaires are being brought to heel in furtherance of President Xi Jinping’s common prosperity goal, such special treatment is notable.
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It also means that whatever historical truths may lie behind Ren’s protestations that Huawei acts separately from the government, that independence has come to an end. Beijing leveled trumped-up spying charges against two foreigners, and then traded them for the release of a single company executive. Huawei owes it a debt of gratitude. In Xi’s China, such a favor won’t be forgotten. Huawei didn’t respond to emails sent to multiple public relations executives on Saturday in Asia.

This resolution casts doubt on Huawei’s hopes of regaining access to international markets, which dwindled from 48% of revenue in 2018 to 34% in 2020. Foreign governments, and their intelligence agencies, will seize on Beijing’s negotiation to make the case that Huawei is, indeed, controlled by the state.

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