Chinese embassy in Ottawa demands release of Huawei exec arrested in Vancouver

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It says she was arrested when she was transferring flights in Canada.

Law-enforcement sources told The Globe and Mail the USA alleges Ms. Meng tried to skirt the US embargo against Iran. "We struggle to see how a comprehensive agreement can emerge in the next 3 months and instead expect trade tensions to resurface in earnest early next year".

The news weighed on markets in Asia.

Huawei is not the first Chinese telecoms equipment firm to face the ire of USA authorities.

The detention of Ms Meng threatens to scuttle the temporary detente reached by US President Donald Trump and his Chinese counterpart Xi Jinping at the G20 talks in Argentina to halt new trade tariffs for 90 days as the two countries negotiate.

Stock markets in Europe and Asia also felt the brunt of the arrest with a sea of red flashing across the board after being dragged down by sharp losses in technology shares. Hong Kong's Hang Seng dropped 2.5 per cent while Chinese bluechips lost 2.1 per cent to take their 2018 slump to 20 per cent. "The Chinese side firmly opposes and strongly protests over such kind of actions which seriously harmed the human rights of the victim", reads a statement released by the embassy.

"We have made solemn representations to Canada and the U.S., demanding that both parties immediately clarify the reasons for the detention, and immediately release the detainee to protect the person's legal rights", foreign ministry spokesperson Geng Shuang told reporters. The arrest has been made by Canadian law enforcement at the request of the U.S. over violating the Iran sanctions.

Meng's arrest has "potentially huge implications" for the trade war and signals the United States government is willing to get tough on Chinese companies that do business with Iran, according to Michael Every, head of Asia-Pacific research at investment bank Rabobank.

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Huawei is one example of what the Trump Administration is targeting in its trade dispute with China. The Global Times is a state-run newspaper whose views are thought to reflect the ruling communist party in China.

An executive with a US-based multinational company, meanwhile, said the incident may not be part of Trump's tactics. "The incident could turn out to be a breaking point", Zhu said.

Huawei, along with many other Chinese phone manufacturers and telecom equipment makers, is viewed with significant suspicion by the "Five Eyes" intelligence alliance, comprised of Australia, Canada, New Zealand, the United Kingdom, and the United States. It's shooting for the lead in fifth-generation wireless networks and preparing to take on some of America's biggest chipmakers. It said Huawei still is a supplier of other equipment and a "valued innovation partner".

The broad market decline came as the arrest of a senior Chinese technology executive overshadowed some positive comments on trade from Beijing and threatened to worsen trade tensions between the USA and China. Washington has previously raised concerns about the Chinese conglomerate because of its links to Beijing's government. Federal authorities said ZTE had violated American sanctions against Iran and North Korea, in a move that caused the Chinese company to cease "major operating activities" for a time. Three months later, the company eventually reached a deal with U.S. authorities by paying $1.4 billion in fines, as well as agreeing to overhaul its senior management.

Faced with this explosive report, Huawei first denied the story, calling the report "unfounded". Meng's father Ren Zhengfei, a former army engineer who's regularly named among China's top business executives, has won acclaim at home for toppling Apple Inc.in smartphones and turning an electronics reseller into a producer of networking gear with revenue surpassing Boeing Co.

A Huawei spokesperson said Meng faces unspecified charges in the Eastern District of NY.

A Chinese government statement said Meng broke no US or Canadian laws and demanded Canada "immediately correct the mistake" and release her.

A US Justice Department spokesman declined to comment.

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