U.S. markets set to drop amid Huawei arrest, trade war

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"Targeting Huawei through seeking the extradition of a top executive is a major move by the US government, whether coordinated or not".

The arrest, understood to have happened on December 1, is related to alleged violations of U.S. sanctions, according to reports.

Meng "was arrested in Vancouver on December 1", a statement by Canada's ministry of justice said.

"The arrest comes against a backdrop of concerns about trade and technology as well as cyber security when using Chinese hardware for IT systems", said Michael Hewson, analyst at CMC Markets.

US authorities have been probing Huawei since at least 2016 for allegedly shipping USA -origin products to Iran and other countries in violation of USA export and sanctions laws, sources told Reuters in April. Beijing had "lodged stern representations with the US and Canadian side, and urged them to immediately correct the wrongdoing and restore the personal freedom of Ms. Meng Wanzhou".

"No matter how much the Canadian side says that we're just following legal procedures, Chinese officials probably will believe that the arrest was directed or tacitly supported at very senior levels", he said.

Huawei said in a statement that Meng was arrested while changing planes in Canada and that she faced unspecified charges from the Eastern District of NY.

Huawei said Ms Meng, the daughter of founder Ren Zhengfei, was detained while transferring between flights.

USA stock futures and Asian shares tumbled on Thursday after Canadian authorities arrested a top executive of Chinese tech giant Huawei for extradition to the United States, fanning fears of a fresh flareup in tensions between the two superpowers.

Hu Xijin, the editor in chief of the Global Times, described the arrest as a "declaration of war" against China, according to the New York Times.

"She is sought for extradition by the United States, and a bail hearing has been set for Friday", Justice Canada spokesperson Ian McLeod told the News via email.

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Meng is the daughter of Huawei's founder and CEO Ren Zhengfei, and also serves as deputy chair on Huawei's board. Authorities in Canada have arrested Meng Wanzhou, chief financial officer of Chinese tech giant Huawei .

"If a couple of Canadian nationals are arrested somewhere as a bargaining chip, it may not be surprising", he said.

On the other hand, the Chinese embassy in Canada issued a statement asking both the United States and Canada to "immediately correct the wrongdoing and restore the personal freedom of Ms. Meng Wanzhou". "Huawei complies with all applicable laws and regulations where it operates, including applicable export control and sanction laws".

US stocks tumbled in early trading Thursday following a sell-off in overseas markets, knocking more than 450 points off the Dow Jones Industrials Average. ZTE was almost driven out of business this year when Washington barred it from buying US technology over exports to North Korea and Iran. In a report released by the U.S. Permanent Select Committee on Intelligence in 2012, Huawei and ZTE Corp. were tagged as potential threats to U.S. security interests.

The "message is clear - the United States is closing the borders to many Chinese technology companies", said Neil Campling, co-head Global Thematic Group at Mirabaud Securities.

Last month, New Zealand blocked a mobile phone company from using Huawei equipment, saying it posed a "significant network security risk".

US Senator Ben Sasse praised the move and said that it was "for breaking US sanctions against Iran".

Huawei is one of the world's largest telecoms companies, and is the world's second-largest smartphone manufacturer behind Samsung.

It's also "obvious that Huawei and all related firms will fall under more severe inspection if they want to step into foreign markets", he said.

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

The case showed that China is highly dependent on imports of US-made semiconductors or computer chips and reinforced Beijing's need to become self-reliant on this key technology.

In a response, ZTE denied the charges while Huawei insisted it "posed no greater cybersecurity risk than any ICT [Information and Communications Technology] vendor".