Stocks plummet as arrest of Huawei executive brings US-China relations into question
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The Dow Jones fell 505 points on Thursday, as news broke of Huawei CFO Meng Wanzhou’s arrest and planned extradition to the US. The drop brings the Dow’s 2-day losses to over 1,300 points.
Wanzhou was arrested in Vancouver, Canada, on Sunday, and now faces extradition to the United States. The charges against Wanzhou – the daughter of the telecoms company’s founder – remain unknown, but could relate to a possible violation of sanctions against Iran.
The Huawei executive’s arrest comes at a critical time for US-China relations. Both countries have been locked into a trade war for much of the year, and only agreed last weekend to restart discussions. President Trump has agreed to postpone planned tariff hikes on Chinese goods, while China has pledged to purchase a “very substantial” amount of American produce and curb the export of deadly opioid Fentanyl to the US in exchange.
Representatives from both countries now have just short of 90 days to negotiate, unless the timeframe is extended or a deal reached beforehand.
While stocks rallied on Monday, lingering uncertainty surrounding the precise details of the trade war truce have seen the Dow slump since.
Wanzhou’s arrest could have a significant effect on markets and on US-China relations.
Huawei is one of the world’s largest telecoms companies, and is the world’s second-largest smartphone manufacturer behind Samsung. The company has been accused of using its devices to pass on information to the Chinese government, prompting the US Department of Defense to ban their sale on military bases.
Earlier this year, six top US intelligence chiefs voiced their concerns about Huawei phones to the Senate Intelligence Committee, with FBI Director Christopher Wray saying he was “deeply concerned about the risks of allowing any company or entity that is beholden to foreign governments that don’t share our values to gain positions of power inside our telecommunications networks.”
Huawei, for its part, has consistently denied accusations of spying, and responded to the arrest of Meng by saying it complies with “all applicable laws and regulations” where it operates.
Beijing has called for Meng’s release, and the Chinese embassy in canada said that her arrest “seriously harmed the human rights of the victim.” Meng, it said, was “not violating any American or Canadian law.”
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