Huawei Criminal Charges Cast Pall Over US-China Trade Talks

US treasury secretary Steven Mnuchin has said he expects “significant progress” at a critical meeting between Chinese and US trade officials that begins in Washington, D.C. on Wednesday, in spite of the raft of criminal charges the US launched against Chinese telecoms equipment giant Huawei earlier this week.

US president Trump is expected to meet China’s top economic envoy, Liu He, during the two-day meeting, which comes amidst an escalating trade conflict between the US and China that has thus far effectively shut down a major Chinese chip manufacturer, slowed China’s economic growth and led to profit warnings from US companies including Apple, Intel and Nvidia.

The current US administration has levied tariffs on some $250bn (£190bn) of Chinese goods, tow hich China has responded with its own tariffs.

In December the countries agreed to suspend new tariffs for 90 days to allow talks.

Criminal charges

The talks follow on the heels of the US’ announcement of a string of criminal charges against Huawei, the world’s biggest manufacturer of telecoms equipment, which US officials have long  accused of facilitating espionage activities on behalf of the Chinese government.

The charges, which include bank fraud, obstruction of justice and theft of technology, also target Huawei chief financial officer Meng Wanzhou, who was arrested in Canada on 1 December at the request of the US.

“For years, Chinese firms have broken our export laws and undermined sanctions, often using US financial systems to facilitate their illegal activities,” said US commerce secretary Wilbur Ross. “This will end.”

Many of the 23 charges relate to Huawei’s alleged dealings with Iran, which is the subject of US economic sanctions.

For instance, the US charges accuse a senior Huawei executive of falsely telling FBI agents that the company did not deal directly with Iranian companies and that it complied with all US export laws.

US prosecutors said Huawei claimed to have sold an Iranian subsidiary, Skycom, but had actually sold it to themselves.

The charges against Meng also relate to Huawei’s alleged efforts to get around US sanctions on Iran.

Other allegations relate to the alleged theft of technology from US carrier T-Mobile.

The technology in question, Tappy, simulated human fingers in order to carry out durability tests on phones.

Penalties

Huawei rejected the charges, saying it did not commit  “any of the asserted violations” and was not “not aware of any wrongdoing by Ms Meng”.

It said the charges related to T-Mobile’s technology were the subject of a 2014 civil lawsuit that had already been settled, with a jury finding “neither damages nor willful and malicious conduct on the trade secret claim”.

In Beijing, government spokesman Geng Shuang said the allegations were the result of “political motivations” and US efforts to “smear and suppress certain Chinese companies”.

“We urge them to treat Chinese enterprises in a fair and just way,” he said.

Prosecutors said that Huawei could face a fine of three times the value of the stolen trade secret and up to $500,000 for wire fraud and obstruction of justice.

US commerce secretary Ross said in a statement the charges were “wholly separate” from US-China trade negotiations.

Matthew Broersma

Matt Broersma is a long standing tech freelance, who has worked for Ziff-Davis, ZDnet and other leading publications

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