The detention of Huawei CFO Meng Wanzhou in Canada at the behest of US authorities led to a great deal of anger on the part of Chinese authorities. The immediate retaliation to Meng’s arrest was the detention by Chinese authorities of Canadian diplomat Michael Kovrig, who was on a leave of absence from the Canadian foreign ministry to work for International Crisis Group.
US authorities continued ramping up pressure on Huawei, urging American companies and other Western nations not to use any of Huawei’s products over fears that they could be used by the Chinese government for espionage purposes. While Huawei has publicly denied any close cooperation with the Chinese government, its founder Ren Zhengfei formerly worked in a Chinese military information technology unit and has allegedly received key support from the Chinese government for his business.
It was perhaps inevitable that the US and other Western governments’ actions towards Huawei have resulted in what appears to be low-level retaliation by the Chinese government and Chinese companies. For its part Huawei has asked it suppliers to move their production out of the United States and into China. That’s largely to shield the company from the ramifications of an expected export ban on technology transfers to the company. But there are other curious coincidences that are occurring too.
Construction on a $1 billion mixed-use real estate complex in downtown Los Angeles has ground to a halt recently and no one seems to know exactly why. The complex is being built by a Chinese company so there could be any number of reasons for the slowdown. It could be the result of the company not having the funds to continue construction, or it could be the result of the Chinese government restricting capital outflows, or it could be the result of the Chinese government putting pressure on the company not to continue investing in US projects.
Then there’s the case of Taiwanese company Foxconn’s building of a plant in Wisconsin. The facility was originally supposed to be a manufacturing facility for flat screen panels, with up to 13,000 jobs created. The company has now dropped plans for manufacturing but still claims that it will go ahead with the building of the facility, which will hire engineers and be used for research, development, and design instead. Could Foxconn, which has over a million employees at its dozens of factories in China, have been pressured by the Chinese government to scale back its plans in Wisconsin lest it face retaliation in China?
All of these are just questions at this point, with no clear answers. One thing is certain, however. If the US continues its push to prosecute Chinese nationals and Chinese firms, you can guarantee that the Chinese government will retaliate, and American consumers and workers may suffer.
