Saturday, October 1, 2022

China-US trade deal possible now that US dropped Huawei CFO’s arrest

By Evi Ryoo, CNN

Meng Wanzhou is finally free.

A Canadian judge released the chief financial officer of Chinese telecommunications giant Huawei on bail Sunday in Vancouver, granting her release on $10 million ($7.6 million) in bonds and a global travel ban.

It was a happy ending for the executive, but the saga of Meng, one of the highest-ranking women in the Chinese Communist Party, ended with a big disappointment for US President Donald Trump.

At the center of this saga, America’s insistence on arresting Meng is seen by China as a threat to cross-border trade, and the arrest led to a heated exchange between the White House and Chinese officials in March that saw the phone call between Trump and Chinese President Xi Jinping called off.

Trump himself had publicly declared in late March that he expected his administration to press ahead with Meng’s arrest, drawing criticism from lawmakers from both sides of the aisle.

“We’ve developed a very good relationship, and the president actually thinks we’re going to do something about trade,” White House press secretary Sarah Sanders said March 31. “But something has to do with not having China look like it’s retaliating, so we’re not able to.”

The decision wasn’t just a blow to Trump, but to the Trump administration, which has appeared boxed in by Meng’s arrest.

In March, Trump was unable to win Chinese support on a North Korea diplomacy overture that he was certain to hear from Xi, leaving administration officials and investors at a loss for tactics to generate momentum in trade talks between the world’s two largest economies.

Meng’s arrest, however, may have created a wedge between China and the United States that may ultimately ease tensions.

Dissolving trade war?

As China and the United States rapidly close in on a trade deal, and countries are expressing surprise at Trump’s move to interfere in the judicial process on behalf of Huawei’s CFO, the path for both countries looks set to be smoother.

“[Meng’s arrest] just like the Trump administration picking up the phone to make an in-person call, just like the People’s Liberation Army Headquarters calling the White House, will drive the US and China to dissolve the trade war,” Shen Zhizhen, a Beijing-based trade lawyer who formerly worked in the Chinese Ministry of Commerce, told CNN.

“It’s a win-win situation. Both countries win because both countries have a huge domestic audience watching the discussions in these kinds of situations,” Shen said.

On Wednesday, the Wall Street Journal reported that the two countries would soon reach a trade deal on North Korea, after an Easter dinner between Trump and Chinese President Xi.

“We expect the trade talks to accelerate after the Chinese have the leverage to talk about ending the disputes,” said Ting Lu, head of China research at Bank of America-Merrill Lynch in Hong Kong.

“It is as if the issue of Huawei CFO has been neutralized.”

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