Court documents reveal details of Huawei CFO’s Vancouver connection, legal defence

Newly released court documents from the bail hearing for Huawei CFO Meng Wanzhou offer a closer look at the executive’s connection to Vancouver and her possible coming legal defence.

Meng was arrested in Vancouver on Dec. 1 at the request of U.S. authorities, who want her extradited to face fraud charges related to alleged violations of sanctions against Iran.

She remains in custody in Vancouver pending the outcome of her bail hearing.

Vancouver connection

Global News combed through hundreds of pages of documents released this weekend, including affidavits filed by both Meng and her husband Xiaozong Liu.

The affidavits reveal the couple owns two homes in Vancouver.

One home is at 4005 West 28th Ave., purchased in 2009 and valued at $5.6 million in 2017, and one is at 1603 Matthews St., purchased in 2016 and valued at $16.3 million in 2017, which they claim is currently under renovation for the family’s use.

The filings reveal the mother of four seeks to live at the 28th Avenue home if granted bail, and say her husband, daughter and extended family would move to the city to live with her. They also offer the homes’ equity as collateral against bail.

The documents also speak to Meng and her family’s 15-year connection to Vancouver.

The documents reveal two of her children attended school in the city between 2009 and 2012 while her husband completed a master’s degree there.

“Even after the children stopped attending school in Vancouver, my husband and younger children spent many weeks, sometimes months, here during the summer,” states Meng’s affidavit.

“Since approximately 2010, my in-laws typically stay at our home in Vancouver for multiple months in the summer … I always try to spend at least 2-3 weeks in Vancouver every summer.”

Coming legal strategy

While Meng’s case has not even completed its bail hearing phase, never mind extradition proceedings, the court filings hint at Meng and Huawei’s legal strategy ahead of a potential U.S. court case.

The submission summarizes the U.S. goverment’s case as alleging that Huawei “effectively ‘controlled’ an entity called Skycom” until about 2014, and that it had operated in violation of sanctions against Iran at some point between 2007 and 2013, while defrauding U.S. banks by misrepresenting its relationship with the smaller company.

The submission highlights a specific date upon which fraud is alleged to have occurred, Sept. 3, 2013, in which Meng gave a PowerPoint presentation to an unnamed financial institution.

In it, Meng is alleged to have misrepresented Huawei’s ownership and control of Skycom and its compliance with U.S. laws.

skycom 4

PowerPoint slides included in Meng Wanzhou’s bail proceedings.

skycom 3

PowerPoint slides included in Meng Wanzhou’s bail proceedings.


PowerPoint slides included in Meng Wanzhou’s bail proceedings.

pp slide 1

PowerPoint slides included in Meng Wanzhou’s bail proceedings.

The slide in question refers to the fact that Huawei was once a shareholder in Skycom, and that Meng sat on the company’s board “to ensure trade compliance.”

It is alleged that “because the applicant used the word “I” in the presentation, she must have had personal knowledge of the factual accuracy of her statements,” states the document.

“As a review of the document itself reveals, the presentation from which the U.S. authorities select excerpts indeed emphasizes Huawei’s extensive compliance programs and its efforts to comply with the complex and dynamic applicable legal regimes in the many counties it operates.”

The submission further argues that even if Huawei was in violation of sanctions — which it does not concede — there is no evidence Meng was aware of it.

“The case against the Applicant seems to rest wholly on her reliance on a PowerPoint presentation prepared by others,” it states.

The submission, along with affidavits supplied by Huawei’s U.S. lawyer Bryan Harrison, also detail Huawei’s history of legal interactions with U.S. government regulators and auditors.

Meng’s bail submission refers to a report from KPMG in Huawei’s 2017 Annual Report which details the company’s “enterprise-wide commitment to compliance,” and which “lists the company’s related parties and major subsidiaries, and that list includes neither Skycom nor the entity that purchased it.”

Harrison’s affidavit also details a series of interactions between Huawei and the U.S. Department of Commerce, Bureau of Industry and Security, Office of Export Enforcement (OEE) between 2013 and 2016.

Harrison submits that in 2014 the OEE found no violations, that in 2016 Huawei confirmed to the OEE that it had been meeting annually with U.S. government officials between 2009 and 2014 to discuss sanctions compliance efforts, and that in 2010 and 2014 it retained U.S.-based auditors to ensure that compliance.

Harrison’s submission also argues that there have been no lawsuits filed against Huawei by any of the financial institutions it is alleged to have defrauded or indictments against the company itself by U.S. governments.

Bail proceedings

Meng’s bail proceedings are set to resume on Monday in B.C. Supreme Court in Vancouver.

Meng’s defence has submitted that she does not pose a flight risk, owing in large part to her connection to the city, along with a moral obligation to see the case through that is laid out in her affidavit.

“My father founded Huawei and I would never do anything that would cause the company reputational damage,” the document reads.

“I believe that breaching my bail conditions would cause such damage.”

Crown prosecutors dispute that position, arguing that Meng has no meaningful connection to the jurisdiction, virtually inexhaustible resources and is a citizen of a country with no extradition treaty with Canada and the U.S.

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‘Aquaman’ Dives Into China With $25M Friday; Record Warner Bros & December Bow

Warner Bros/DC’s Aquaman took his first strokes in China today, grossing an estimated $24.6M (RMB 169.5M). The studio has been pulling out the stops locally as the Middle Kingdom is launching the Jason Momoa-starrer two weeks ahead of its domestic release. The DCEU has not had the draw in China that the Marvel Cinematic Universe has enjoyed, but Aquaman is poised to hit a high-water mark for the DC brand with a possible $80M+ debut weekend.

Already, the flash estimate on 30,500 screens, 100% of which are 3D, is the highest opening day ever for a WB title and the best industry opening day ever for December. The film commanded 86% market share on Friday. Online sentiment is high with a Maoyan score of 9.5, Taopiaopaio at 9.4 and Douban at 8.4.

Previous DC outings Batman V Superman: Dawn Of Justice, Wonder Woman and Justice League had full China opening frames of $57.2M, $51.8M and $38.2M, respectively and at unadjusted rates. The Middle Kingdom was ultimately the top market for each of those pics (Suicide Squad did not release there), although just Justice League cracked the $100M mark at cume.

Directed by James Wan, the standalone sees Momoa’s Arthur Curry/Aquaman learn he is the heir to the underwater kingdom of Atlantis, and that he must step forward to lead his people, becomiung engaged in a perilous quest for ancient secrets. Amber Heard, Patrick Wilson, Niocole Kidman, Willem Dafoe, Dolph Lundgren, Djimon Hounsou and Yahya Abdul-Mateen II also star.

The character dates back to 1941 in the comics; Momoa was briefly introduced as the seafaring loner with superhuman strength in Dawn Of Justice and then in a bigger role in Justice League.

Aquaman got its China release date in mid-October and leveraged that to get the word out locally. It’s still rare for a movie to debut in the Middle Kingdom ahead of domestic, but we have seen some examples of this before. Warner went hard on local promotion. Momoa, Heard and Wan all visited the market where WB is partnered with key online outlets and social media platforms including Weibo and WeChat.

The 25 minutes of footage that was shown early locally was met with enthusiastic social response which looks to be paying off now that the film has opened.

Aquaman has the distinction of being the first superhero movie WB has released during Christmas. BVS was a March/Easter movie, Wonder Woman played in summer and Justice League hit the domestic Thanksgiving corridor last year. The movie may benefit overseas from school holidays kicking in earlier while in China nothing much has made an impact recently in the wake of the outsize performance of Sony/Marvel’s Venom (which last week was granted an extended release so will still be playing this frame).

Looking back at the China comps for Aquaman, BVS in 2016 delivered the then-biggest opening day of all time for a WB film with $20M (RMB 128.7M). In the Middle Kingdom it finaled at $95.8M with the UK, Brazil, Mexico and Australia rounding out the Top 5 for an ultimate $543M international box office cume.

Wonder Woman’s China bow was $38.2M for its opening frame with $90.5M through the run. Her top markets were China, Brazil, the UK, Australia and Mexico, and her final offshore gross was $409.2M.

Justice League did $51.8M (RMB 343.8M) for the Middle Kingdom launch weekend, taking $106M there at final. The overseas total was $429M with Brazil, Mexico, the UK and Oz falling in line behind China.

Before North America on December 21, Aquaman next session swims to 40 more overseas markets including Russia, Brazil, Mexico and the UK. Another 28 will be added the following weekend including Korea and France. He heads Down Under on December 26 and goes to Italy January 1 and Japan February 8.

We’ll have more China updates throughout the weekend.

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Russia says detention of Chinese executive shows US arrogance

MILAN, Dec 7 – Russian Foreign Minister Sergei Lavrov said on Friday that the detention of Chinese technology giant Huawei’s chief financial officer in Canada was an example of “arrogant” U.S. policy abroad.

Speaking at a news conference in Milan, Lavrov said the detention showed how Washington imposes its laws beyond its jurisdiction.

Huawei CFO Meng Wanzhou, 46, who is also the daughter of the company founder, was arrested on Dec. 1 at the request of the United States. The arrest, revealed by Canadian authorities late on Wednesday, was part of a U.S. investigation into an alleged scheme to use the global banking system to evade U.S. sanctions against Iran, people familiar with the probe told Reuters.

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China demands Huawei’s CFO released after ‘violating Iran sanctions’

Stocks plummet and China demands release of telecom giant Huawei’s CFO (and founder’s daughter) after she was ARRESTED for ‘violating U.S. sanctions on Iran’ – as tensions between two countries soar

  • Meng Wanzhou, 46, was arrested in Vancouver at America’s request on Saturday
  • She faces extradition to the US for allegedly violating sanctions against Iran 
  • Huawei is one of the largest telecom technology companies in the world
  • Company has been branded national security threat by U.S. intelligence officials
  • China criticized Canada and the U.S. and demanded Meng’s immediate release
  • American business travelers fear China could retaliate by taking ‘hostages’ 
  • The case complicates U.S-China trade talks and has sent world markets tumbling
  • Dow Jones plunged more than 700 points Thursday before rebounding slightly

The arrest of a top executive of Chinese tech giant Huawei at the request of US authorities has caused markets to plunge worldwide as tensions between two countries soar.

Meng Wanzhou, who is Huawei’s chief financial officer and the daughter of the company’s billionaire founder, was detained while in transit this week in Vancouver, Canada.

News broke on Wednesday that the 46-year-old Meng faces extradition to the U.S. over alleged violations of American sanctions against Iran, sending the Dow Jones Industrial Average plunging more than 700 points on Thursday morning, before the index rebounded slightly in the afternoon.

Asian and European markets were also roiled, as the arrest threatens to derail a recent trade war truce between President Donald Trump and Chinese President Xi Jinping, potentially sending the world’s two largest economies back into a disruptive tariff battle. 

Huawei CFO Meng Wanzhou (above in 2014) was arrested Saturday in Vancouver, where she is facing extradition to the U.S. on suspicion that she violated U.S. sanctions against Iran

Meng’s arrest on Saturday came on the same day that Trump met with Xi on the sidelines of the G-20 summit in Argentina, a meeting that produced a 90-day ‘cease-fire’ in the trade war, with both powers pledging to put a freeze on any new tariffs as negotiations proceed.

Analysts say the case against Meng likely proceeded separately within the DOJ from Trump’s trade discussions, and it’s unclear whether he was even aware of the pending arrest when he met with Xi.

Canadian Prime Minister Justin Trudeau said that he himself did know in advance of the pending arrest, but that it was the decision of law enforcement authorities and there was no political interference. 

While the surprise arrest could derail the trade negotiations, it may also provide Trump with a bargaining chip if he decides to intervene in the case, some experts say. 

Others fear that China could retaliate in kind by taking ‘hostages’ from the ranks of American business travelers.

‘If I was an American tech executive, I wouldn’t travel to China this week,’ James Lewis, the director of technology policy at the Center for Strategic and International Studies, told Axios.

Lewis called Huawei ‘one of the Chinese government’s pet companies’ and speculated that the communist country’s leaders wouldn’t be afraid to ‘take hostages.’ 

U.S. authorities have reportedly been probing Huawei since at least 2016 for allegedly shipping U.S.-origin products to Iran and other countries in violation of U.S. export and sanctions laws. 

A five-day view of the Dow Jones shows the steep plunge the index took at Thursday’s opening

President Trump (far right) and President XI (far left) agreed to call a truce in their long-running trade dispute at the G20 on Saturday, the same day that Meng was arrested

Huawei is one of the world’s largest makers of smartphones and telecommunications network equipment, and has been labeled a national security threat by U.S. officials, who have urged allies who host American military bases to ban the use of Huawei products in their communications infrastructure. 

Meng is the daughter of billionaire company founder Ren Zhengfei, a former Chinese People’s Liberation Army engineer.  

The Chinese Embassy in Ottawa said Meng broke no U.S. or Canadian laws and demanded Canada ‘immediately correct the mistake’ and release her. 

‘China has already made solemn representations to the United States and Canada, demanding they immediately correct their wrong behavior and restore Ms Meng Wanzhou’s freedom,’ the embassy said in a brief statement. 

China’s foreign ministry also demanded Canada release Meng. Ministry spokesman Geng Shuang told reporters on Thursday that China was in contact with both Canada and the U.S over the case.   

Geng also said Meng’s legal rights must be ensured. Neither Canada or the U.S. had so far responded to China’s concerns, he added. 

The case adds to Beijing’s tensions with Washington and threatens to complicate trade talks taking place in the midst a cease-fire in a tariff war over China’s technology policy.  

Meng, who is one of the vice chairs on the Chinese technology company’s board and the daughter of company founder Ren Zhengfei (above), was arrested on Dec. 1 and a court hearing has been set for Friday

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Asian stock markets tumbled on the news, with the arrest is stoking fears that the world’s two biggest economies will not be able to reach a long-standing truce and promote global growth.

Markets across Europe also slumped and experts said investors were ‘knocked sideways’ by Meng’s arrest, and fear the Chinese will hit back by stepping up the tit for tat trade war with Washington. 

Huawei CFO Meng Wanzhou. Huawei overtook Apple this year to become the world’s second largest maker of smartphones after Samsung

Markets in America had already been falling since Tuesday on fears of a U.S. economic slowdown. 

Meng, one of the vice chairs on the Chinese technology company’s board and the daughter of company founder Ren Zhengfei, was arrested on December 1 and a court hearing has been set for Friday, a Canadian Justice Department spokesman said, according to the Globe and Mail.

The Canadian newspaper said a publication ban sought from the court by Meng prevented it from reporting further details. 

Representatives of Huawei, one of the world’s largest makers of telecommunications network equipment, told The New York Times: ‘The company has been provided very little information regarding the charges and is not aware of any wrongdoing by Ms. Meng.’  

Meanwhile, Britain’s BT Group said it was removing Huawei’s equipment from the core of its existing 3G and 4G mobile operations and would not use the Chinese company in central parts of the next network.

Huawei, which sells telecommunications and computer electronics equipment, is the world’s second largest maker of smartphones, behind South Korean giant Samsung. Huawei global headquarters is seen above in Shenzhen, China

New Zealand and Australia have already stopped telecom operators using Huawei’s equipment in new 5G networks because they are concerned about possible Chinese government involvement in their communications infrastructure.

Huawei, the world’s biggest network equipment maker ahead of Ericsson and Nokia, has said Beijing has no influence over its operations.

BT said Huawei’s equipment had not been used in the core of its fixed-line network, and it was removing it from the core of the mobile networks it acquired when it bought operator EE.

A U.S. judge last month issued an order finding that China’s ZTE Corp violated probation imposed in March 2017 when the company pleaded guilty for conspiring to evade U.S. sanctions by illegally shipping U.S. goods and technology to Iran. 

Just yesterday President Trump tweeted about his meeting with President Xi and said he believed he meant every word 

ZTE is China’s second-largest telecommunications equipment maker and relies on U.S. components for its smart phones and networking equipment.

The probation violation cited by the judge involves the same conduct the U.S. Department of Commerce penalized in April by imposing a ban on U.S. companies selling goods to ZTE.

Last month, the Trump administration launched an unusual lobbying campaign directed at allied foreign governments, asking them to press wireless and internet providers in these countries not to use Huawei equipment, according to The Wall Street Journal. 

American officials have talked to their counterparts in Germany, Italy, and Japan – countries where Huawei products are widely used.

An aerial view of Huawei Global Headquarters on November 29, 2018 in Shenzhen, China

The U.S. is worried about the extent to which Chinese-made equipment is used in the telecommunications sectors of countries that host American military bases. 

The move has been taken with a greater sense of urgency since internet providers are gearing up to purchase massive amounts of hardware for the much-anticipated 5G upgrade.

The advent of 5G promises to make superfast internet connection available to consumers. It is expected to speed up the development of self-driving cars and other technologies that rely on the internet of things.

Huawei, which sells telecommunications and computer electronics equipment, is the world’s second largest maker of smartphones, behind South Korean giant Samsung. 

Founded in China more than 30 years ago, Huawei’s announced revenue is on track to exceeded $100 billion in 2018 for the first time in its history. 

Huawei has managed to achieve significant global market share despite the fact that it is largely shut out of the American market. 

American lawmakers have claimed that Huawei passed sensitive information collected by its equipment to the Chinese government.

U.S. telecommunications firms fear that partnering with Huawei by allowing it to sell their smartphones would anger the federal government and jeopardize future contracts.

Huawei, for its part, has denied sharing information with the Chinese government, as has ZTE. 

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Enter the Bull: Fighters mix kung fu and bullfighting in China

BEIJING/JIAXING, China (Reuters) – Several times a week, kung fu teacher Ren Ruzhi enters a ring to spar with a bovine opponent around five times his weight and capable of killing him.

Ren’s mixing of martial arts and bullfighting worries his mother, but the 24-year-old has never been hurt. Besides, he says, grappling with a snorting bull is exciting.

“It symbolizes the bravery of a man,” Ren told Reuters in Jiaxing in China’s eastern province of Zhejiang.

Unlike Spain’s more famous sport, the Chinese variant of bullfighting involves no swords or gore but instead fuses the moves of wrestling with the skill and speed of kung fu to bring down beasts weighing up to 400 kg (882 lb).

“Spanish bullfighting is more like a performance or a show,” said Hua Yang, a 41-year-old enthusiast who watched a bullfight during a visit to Spain.

“This (the Chinese variety) is truly a contest pitting a human’s strength against a bull. There are a lot of skills involved and it can be dangerous.”

The physically demanding sport requires fighters to train intensively and they typically have short careers, said Han Haihua, a former pro wrestler who coaches bullfighters at his Haihua Kung fu School in Jiaxing.

Han calls the bullfighting style he teaches “the explosive power of hard ‘qigong’”, saying it combines the skill and speed of martial arts with traditional wrestling techniques.

Typically, a fighter approaches the bull head on, grabs its horns and twists, turning its head until the bull topples over.

“What do I mean by explosive power?” Han asked. “In a flash! Pow! Concentrate all your power on one point. All of a sudden, in a flash, wrestle it to the ground.”

If the first fighter gets tired, another one can step into the ring, but they have just three minutes in which to wrestle the bull to the ground or lose the bout.

The bulls, too, are trained before entering the ring, Han said, and learn themselves how to spread their legs or find a corner to brace against being taken down.

“A bull can also think like a human, they are smart,” Han added.

Although he says his bulls get better treatment than the animals involved in the Spanish sport, animal rights activists believe Chinese bullfighting is still painful for the animals and cruel as a form of entertainment.

“In Chinese bullfighting, we cannot deny the bulls experience pain,” said Layli Li, a spokeswoman for animal welfare group PETA. “As long as it exists, that means there is suffering.”

($1=6.9153 Chinese yuan renminbi)

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Ex-Hong Kong official found guilty of U.S. corruption charges

(Reuters) – A former Hong Kong government official was found guilty on Wednesday of U.S. charges that he took part in a scheme to bribe officials in Chad and Uganda in exchange for contracts for a Chinese energy company, according to a spokesman for federal prosecutors.

Chi Ping Patrick Ho, 69, was convicted of seven of the eight counts against by a jury in federal court in Manhattan after a trial lasting just over a week.

Edward Kim, a lawyer for Ho, declined to comment.

Ho, a former Hong Kong home affairs secretary, was arrested in November 2017 on charges of violating U.S. foreign corruption law, money laundering and conspiracy. Federal prosecutors said he arranged bribes on behalf of a Chinese energy company that funds an organization he leads.

At the time of his arrest, Ho was secretary-general of the Hong Kong-based China Energy Fund Committee, an organization funded by the Shanghai-based energy conglomerate CEFC China Energy.

Prosecutors said Ho caused the energy company to offer a $2 million bribe to the president of Chad, Idriss Deby, in 2015 in exchange for exclusive oil rights in that country.

The government of Chad has denied the U.S. charges.

Prosecutors also said that Ho caused $500,000 to be wired to Uganda’s foreign minister in 2016, with the promise of further payments in the future, to secure favors for the Chinese company, including the potential acquisition of a Ugandan bank.

Sam Kutesa, who previously served as president of the U.N. General Assembly, has been Uganda’s foreign minister since 2015. Uganda has denied the allegations.

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‘Wrestle it to the ground’: Inside the dangerous world of Chinese bullfighting

BEIJING/JIAXING, China – Several times a week, kung fu teacher Ren Ruzhi enters a ring to spar with a bovine opponent around five times his weight and capable of killing him.

Ren’s mixing of martial arts and bullfighting worries his mother, but the 24-year-old has never been hurt. Besides, he says, grappling with a snorting bull is exciting.

“It symbolizes the bravery of a man,” Ren told Reuters in Jiaxing in China’s eastern province of Zhejiang.

Unlike Spain’s more famous sport, the Chinese variant of bullfighting involves no swords or gore but instead fuses the moves of wrestling with the skill and speed of kung fu to bring down beasts weighing up to 882 pounds.

“Spanish bullfighting is more like a performance or a show,” said Hua Yang, a 41-year-old enthusiast who watched a bullfight during a visit to Spain.

“This (the Chinese variety) is truly a contest pitting a human’s strength against a bull. There are a lot of skills involved and it can be dangerous.”

Bullfighter Ren Ruzhi, 24, fights with a bull during a practice session at the Haihua Kung-fu School in JiaxingBullfighter Ren Ruzhi, 24, poses at the bull stable of the Haihua Kung-fu School in JiaxingMartial artist Ren Ruzhi, 24, shows off his kung-fu skills before a bullfight in JiaxingZhong Xiaojie, 19, wrestles a bull to the ground during a bullfight in JiaxingBullfighter Ren Ruzhi, 24, fights with a bull during a practice session at the Haihua Kung-fu School in Jiaxing

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China announces plans for first ever mission to dark side of moon days after Nasa and Russia announce ‘permanent’ lunar bases

If successful, the Chang’e-4 mission would be the first time a spacecraft has ventured to the far side of Earth’s only natural satellite.

The move comes just days after both Nasa and Russia announced intentions to establish a “permanent” lunar base.

Nasa said recently it wanted to send humans back there “to stay” with the aim of using it as a base for journeys to Mars.

Russia said at the end of last month it wanted to build a colony on the Moon by 2040.

China hopes its mission will reveal some of the mysteries of the Moon by venturing to a part of the body that is largely unknown.

The spacecraft will also carry out a range of scientific experiments; including one which will test if it is possible to grow plants there.

It is hoped a rocket will blast off from Xiching Satellite Launch Centre in Sichuan province on December 8 and enter the Moon’s orbit before touching down in a massive crater near the Moon’s south pole.

A rover will hopefully measure the mineral composition of the Moon with an infrared spectrometer, which may help geologists understand the processes involved in the Moon’s evolution.

Dr Carolyn van der Bogert, a planetary geologist at Westfälische Wilhelms University in Münster, Germany, said: “This mission is definitely a significant and important accomplishment in lunar exploration.”

Although the first image of the dark side of the Moon were taken in 1959 no spacecraft has ever landed on it.

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Trump’s China trade war is actually bringing progress

Just because the US and China have agreed to a truce in their trade war doesn’t mean that it’s over: This was a classic exercise in can-kicking. Still, most cans have quite a few kicks in them, and overall this is good news for the global economy. Instead of sweeping everything under the rug, as was the case before President Trump took office, Washington and Beijing have learned to talk openly about the conflict.

Let’s consider the announcement. The US has pledged to postpone raising tariffs to 25 percent on $200 billion of Chinese goods. China in turn has pledged to buy more American goods, and the two countries have 90 days to reach a broader agreement, which is supposed to cover forced technology transfers and cyber attacks in addition to typical trade issues.

That’s not enough time to allow the bureaucracies to work out the details, but extensions can and probably will be granted.

The symbolic elements of the deal are at least as important. First, China has acknowledged that exports of fentanyl, a highly addictive synthetic drug, are a very real problem for the US, and has pledged to ban them. Simply getting China to accept blame — for anything — is a step forward.

It’s a sign that China will start conducting its diplomacy less defensively and more like a normal member of the global community.

Another symbolically important detail: White House trade adviser Peter Navarro, a trade hawk, attended the meetings and participated in the process. Maybe he’s unhappy with the temporary deal, but still this is a sign Navarro and a Chinese trade agreement — even if only a can-kicking one — can coexist. If Trump sees this deal as beneficial to him politically, Navarro’s protectionist influence may recede.

Perhaps most important, both the Chinese government and public opinion aren’t in a downward-spiraling, negative dynamic. Sure, giving China points for not getting worse isn’t the best way to keep score. Still, the Trump administration has managed to send China a real warning on trade, more than it received under prior administrations, without destroying relations.
That, too, has to count as a real victory.

Some observers have pointed out that the American and Chinese summaries of the deal offer somewhat different emphases. I see that as a feature of the deal rather than a bug, and one that is hardly uncommon for can-kicking arrangements. Each side can present this agreement to domestic interest groups in a way that will shore up political support. The relevant alternatives on the table, most of all an escalation of trade tensions, were far worse.

So what is the most likely outcome from here?

The basic problem with any US-China trade conflict is that there isn’t very much the Chinese are interested in offering, and their intransigence is more than just a bargaining stance. They are willing to buy more American soybeans and manufactured goods (and probably wish to anyway), and they might give US financial institutions more leeway within China.

But they won’t dismantle their system of state-owned enterprises, as those companies are among China’s most powerful special interest groups. Nor will Beijing give American tech companies free rein, if only for reasons of national security and the Chinese desire to build a surveillance state based on data controlled by China.

Overall, the grievances on the US side are significant, and the possible concessions on the Chinese side are minor.

So the most likely outcome is modest progress in difficult negotiations. It’s also likely that the power and focus of the Trump administration will wane as it deals with investigations from the new Democratic-controlled House of Representatives. It might be said that the trade war you now see is the trade war you are going to get. Foreign relations gridlock will set in.

Nonetheless, it isn’t quite fair to describe the trade war with China as a problem that Trump started and then pretended to solve. The reality is that hostility toward Chinese trade practices has been building for some time. Anti-China measures have long commanded bipartisan support not only in Washington but also among corporate leaders, who see themselves as victims of unfair Chinese trade practices and espionage. This is an issue that predates Trump, and he deserves some credit for doing something to help solve it.

© 2018, Bloomberg Opinion

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