The chief financial officer of China's global telecommunications giant Huawei has been arrested in Canada and faces extradition to the United States, officials said Friday, triggering a strong protest by Beijing, which called for her immediate release.
A Chinese statement said Meng did not break any USA or Canadian laws and that Beijing expected Canada to "immediately correct the mistake" and release her from custody.
He also said Meng's legal rights must be ensured, adding that neither Canadian nor American officials had so far responded to China's concerns.
Her arrest, revealed late on Wednesday by Canadian authorities, is related to US sanctions, a person familiar with the matter said.
USA authorities have been probing Huawei since at least 2016 for allegedly shipping US -origin products to Iran and other countries in violation of USA export and sanctions laws, sources told Reuters in April.
She also said she was married with a son and a daughter and that her husband did not work in the industry, dismissing speculation she was married to a senior Huawei executive.
Meng's arrest could have a significant effect on markets and on US-China relations.
Arthur Kroeber, founder of Gavekal Dragonomics, said it was unlikely that Beijing would retaliate against the local USA business community, whose interests have partly overlapped with China's in the trade war and been a source of leverage for Beijing. "Huawei has direct ties to the Chinese government and Communist Party, has long posed a serious risk to US national security".
The U.S. government came to this conclusion after an 11-month investigation into the company and its rival ZTE Corp.
ZTE is China's second-largest telecommunications equipment maker and relies on US components for its smart phones and networking equipment.
The Department of Justice asserted that Schmidt, a German citizen, knew the company's software falsified emissions tests but kept that information hidden from regulators. The arrest has complicated U.S.
Prime Minister Justin Trudeau says Ottawa had a few days' prior notice of the arrest of an executive from the Chinese telecommunications giant Huawei following US allegations the company violated sanctions on Iran.
Meng's arrest also threatened to inflame disagreements over Iran and Trump's decision to break with other governments and re-impose sanctions over the country's nuclear development.
The news pummeled stock markets already nervous about increased tension between the United States and China and prompted experts to predict that Beijing would retaliate against Canada. Markets are already incredibly nervous over slowing economic growth thanks to the inverted U.S. yield curve.
"Huawei complies with all applicable laws and regulations where it operates, including applicable export control and sanction laws and regulations of the UN, US and European Union", it added.
Despite that, her arrest is unlikely to derail trade talks, said Willy Lam, a politics specialist at the Chinese University of Hong Kong. "We certainly don't inform the President on every one of them".
The White House says Trump and his close aides were not aware the U.S. planned to place an extradition request for Meng ahead of his dinner with Xi on Saturday.
Others say Canada needs to stand firm in the face of Chinese pressure.
Meanwhile, the substantially more independent South China Morning Post reported today that Meng and her father recently told Huawei employees that strict compliance with regulations was sometimes not financially feasible and could be avoided.
Officials discovered ZTE was selling its products with USA technology to Iran and North Korea. ZTE, China's second-largest telecoms equipment maker, agreed to pay $1.4 billion in total fines to the United States after Washington slapped a ban in April on purchases of essential American components for seven years to punish the company for Iran sanctions violations.