MNI EXCLUSIVE: Meng Arrest Casts Shadow Over US-China Talks

By Iris Ouyang

     BEIJING (MNI) - The arrest of Huawei CFO Meng Wanzhou has cast a shadow

over trade negotiations between China and the U.S., several experts advising the

Chinese government and former officials told MNI, with one warning that an angry

Chinese social media response could put pressure on Beijing to dig its heels in.

     State media has shied away from linking Meng's arrest in Vancouver Dec. 1

on a U.S. arrest warrant to trade talks agreed after a meeting between

presidents Xi Jinping and Donald Trump at the G20 summit the same day, and a

former Ministry of Commerce official told MNI the Chinese government would not

allow the case to interfere with the negotiations. Instead, China would approach

talks from a legal and practical perspective, the former official said.

     But Chinese social media has boiled over with accusations that Meng's

detention was part of a U.S. campaign to curb China's growth, stymie its

technological development and bully its citizens.

     "Now can be a very dangerous time," Tu Xinquan, a foreign trade expert at

the Advisory Committee for Economic and Trade Policy of the Ministry of

Commerce, told MNI. "When countries are pressured by public opinion, they can't

take calm and rational attitudes to tackling problems."

     Tu, also director of China's WTO Research Institute at the University of

International Business and Economics, said the technology executive's detention

would make it harder for China to compromise in talks.

     "We want to separate the Meng arrest incident and the trade negotiations,"

Tu noted. But at least from the Chinese government's perspective, it's very

hard."

     "If the government makes further concessions, it could fuel radical

voices."

     --BOYCOTT CALLS

     Live coverage of a Canadian bail hearing for Meng posted to Chinese social

media had gained more than 100,000 views by early on Saturday, and accumulated

large numbers of angry comments. The authorities deleted the post a few hours

later, in a sign they might be trying to cool nationalist sentiment.

     Social media voices are also calling for boycotts of Canadian and U.S.

brands, with shares in Canada Goose Holdings Inc., a winter clothing company,

down close to 7% in early trading. Apple Inc., a competitor of Huawei's, fell

almost 2% after a Chinese court ordered the company to stop selling older iPhone

models.

     China's Ministry of Foreign Affairs summoned the ambassadors of both Canada

and the U.S. on Saturday and Sunday to protest Meng's arrest and demand her

release. The timing of the summonses on the weekend was itself a sign of

official anger, Mei Xinyu, a researcher at the Chinese Academy of International

Trade and Economic Cooperation under the Ministry of Commerce, told MNI.

     "The Meng issue will certainly affect the China-U.S. trade negotiations,"

Mei said.

     Wang Huiyao, deputy chairman of the China Association for International

Economic Cooperation and a former official at the commerce department, agreed,

adding that the incident had dispelled the positive sentiment from Xi and

Trump's G20 meeting.

     "The U.S. should be aware that the China-U.S. relations is a systemic

project," Wang, also president of the Center for China and Globalization,

stressed. "It's not like that they can do whatever they want. If they ruin the

whole tone, unexpected things could happen."

--MNI Beijing Bureau; +86 (10) 8532-5998; email: iris.ouyang@marketnews.com

--MNI London Bureau; +44 203 865 3829; email: jason.webb@marketnews.com

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