China to halt additional tariffs on U.S.-made cars as trade dispute de-escalates

BEIJING (Reuters) – China will suspend additional tariffs on U.S.-made vehicles and auto parts for three months starting Jan. 1, 2019, the country’s finance ministry said on Friday, following a truce in a trade war between the world’s two largest economies.

The Ministry of Finance, in a statement on its website, also said it hopes China and the United States can speed up negotiations to remove all additional tariffs on each other’s goods.

“This is a good signal that China and the United States are on track to solve the trade war,” said Wang Cun, director of the China Automobile Dealers Association’s import committee. “Car makers might be ordering a large number of imported cars now.”

Shortly after the Chinese finance ministry’s announcement, Tesla Inc (TSLA.O) said it had cut prices on its Model S and Model X vehicles in China.

Joe Hinrichs, president of Ford Motor Co’s (F.N) Americas unit, also welcomed China’s announcement, noting that the U.S. automaker exported nearly 50,000 U.S.-built vehicles to the country in 2017.

“As a leading exporter of vehicles from the U.S., we are very encouraged by China’s announcement today,” Hinrichs said. “We applaud both governments for working together constructively to reduce trade barriers and open markets.”

Auto exports between the two countries are however relatively small. China exported 53,300 vehicles to the U.S. market last year and imported 280,208 U.S. manufactured vehicles, according to data from the China Automotive Technology and Research Center (CATARC), a government-affiliated think-tank.

In contrast, in the first 11 months of this year, China produced 25.3 million cars, down 2.6 percent from the same period last year, industry figures showed.

Wang said car makers in China that imported cars from the United States had seen a 30 percent decline in volume in the first ten months of the 2018, but the tariff cut would bring imports back to previous levels.

The latest announcement on the planned tariff suspension followed China’s first major purchase of U.S. soybeans since U.S. President Donald Trump and his Chinese counterpart Xi Jinping’s landmark talks on trade in Argentina on Dec. 1.

The tariff suspension and soybean purchase are early signs that the bitter trade war between China and the United States may be starting to thaw.

In Argentina, Trump and Xi agreed to a truce that delayed the planned Jan. 1 U.S. increase of tariffs on $200 billion worth of Chinese goods while they negotiate a trade deal.

A Trump official said on Tuesday that China had agreed to cut tariffs on U.S.-built cars and auto parts to 15 percent from 40 percent.

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China’s tariff cut was communicated during a phone call between Vice Premier Liu He, U.S. Trade Representative Robert Lighthizer and U.S. Treasury Secretary Steven Mnuchin, the official said.

Earlier this year, China hiked its tariffs on U.S. autos and parts after the United States raised its tariffs on Chinese vehicles and parts to 27.5 percent.

China will now suspend 25 percent tariffs on 144 U.S. vehicle and auto part items and 5 percent tariffs on 67 auto items between Jan. 1 and March 31, the finance ministry said.

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Apple China says it will push software update in bid to resolve Qualcomm case

SHANGHAI/SAN FRANCISCO (Reuters) – Apple Inc, facing a court ban in China on some of its iPhone models over alleged infringement of Qualcomm Inc patents, said on Friday it will push software updates to users in a bid to resolve potential issues.

Apple will carry out the software updates at the start of next week “to address any possible concern about our compliance with the order”, the firm said in a statement sent to Reuters.

Earlier this week, Qualcomm said a Chinese court had ordered a ban on sales of some older Apple iPhone models for violating two of its patents, though intellectual property lawyers said the ban would still likely take time to enforce.

“Based on the iPhone models we offer today in China, we believe we are in compliance,” Apple said.

“Early next week we will deliver a software update for iPhone users in China addressing the minor functionality of the two patents at issue in the case.”

The case, brought by Qualcomm, is part of a global patent dispute between the two U.S. companies that includes dozens of lawsuits. It creates uncertainty over Apple’s business in one of its biggest markets at a time when concerns over waning demand for new iPhones are battering its shares.

Qualcomm has said that the Fuzhou Intermediate People’s Court in China found Apple infringed two patents held by the chipmaker and ordered an immediate ban on sales of older iPhone models, from the 6S through the X.

Apple has said that all of its phone models remained on sale in mainland China and that it had filed a request for reconsideration with the court. All the models appeared to be available to buy on Apple’s China website on Friday.

Qualcomm, the biggest supplier of chips for mobile phones, filed its case in China in late 2017, arguing that Apple infringed patents on features related to resizing photographs and managing apps on a touch screen.

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US moves to ban Chinese officials unless Tibet opens

WASHINGTON (AFP) – The US Congress has voted to demand access for US diplomats, journalists and tourists to Tibet, threatening to bar the Chinese officials responsible for the policy from the United States if the region remained walled off to foreigners.

The Bill, which passed with bipartisan support, comes after years of concern over human rights violations in the predominantly Buddhist region, where foreigners are generally required to obtain a special permit to visit.

Congress voted to require the State Department to verify each year whether China has granted access to Tibet and ethnically Tibetan areas, in line with how it treats the rest of the country.

If restrictions remain in place on Americans seeking to enter Tibet, the State Department would then be compelled to ban Chinese officials responsible for the policy from entering the US.

Senator Robert Menendez, the top Democrat on the Senate Foreign Relations Committee, said the Bill was “about fundamental fairness”.

“Chinese citizens enjoy broad access to the United States, and I think that is terrific,” he said.

“But it is unacceptable that the same is not true for US students, journalists or diplomats going to Tibet, including our Tibetan-American constituents just trying to visit their country of origin.”

The Bill passed without objections by a voice vote this week after similar passage in the House of Representatives.

The legislation needs the signature of President Donald Trump, which appears likely, as it has wide support within his Republican Party.

The Bill comes amid frictions between the US and China over trade and the arrest in Canada, on a US request, of an executive with Chinese tech giant Huawei on charges of violating US sanctions on Iran.

A recent op-ed piece in China’s state-run Global Times denounced the Tibet Bill and accused the US of “double standards or even multiple standards on human rights”, pointing to how Washington pulled out of the UN Human Rights Council over the body’s criticism of Israel.

Mr Matteo Mecacci – the president of the International Campaign for Tibet, an advocacy group close to the exiled Dalai Lama that has pressed for the legislation – said the measure was different from trade tensions, as it will become part of US law.

“Certainly this is a major step forward because now it is clearly on the agenda of the Chinese government,” said Mr Mecacci, a former Italian MP.

“Our goal is not to stop Chinese officials from coming here. It is to open up Tibet to the world,” he told AFP.

“If they choose to scrap this system of additional permits, that would be, as they would say, a win-win.”

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Chinese boy who killed his mother released without punishment

HUNAN (CHINA DAILY/ASIA NEWS NETWORK) – The possible return to school of a 12-year-old sixth grader who killed his mother has sparked concern among his classmates’ parents.

Wu Bing (not his real name) was initially taken into custody for the killing and later released without punishment.

The boy from Yuanjiang in Central China’s Hunan province killed his mother with a kitchen knife after she beat him for discovering that he had stolen and smoked all the cigarettes she brought home from banquets on the night of Dec 2.

The murder was not discovered until the afternoon of Dec 3 when Wu Bing’s grandfather became suspicious and checked Ms Chen’s bedroom from a window, and saw blood across the room and Ms Chen’s body on the floor.

Since Chinese law holds 14 to be the statutory age for criminal responsibility, local police released Wu Bing without criminal punishment.

“He is too young for us to do anything about him,” said local police.

When the boy’s family tried to return him to school on Dec 6, however, his classmates’ parents expressed strong opposition, saying that that “he might commit other crimes in school”.

According to public reports, Wu Bing has shown no signs of remorse.

When asked if he thought it was wrong to kill his mother, he said “I’m wrong, but I killed my mother, not someone else.”

According to Chinese criminal law, when children under the age of 16 commit crimes and cannot be prosecuted as adults, they can be sent to government-run shelters and rehabilitation centres.

Many provinces do not, however, have proper shelter and rehabilitation centres for children under 14 years old, and the laws on detention centres are rarely enforced, said a commentary piece on thepaper.cn.

Wu Bing displayed abnormal behaviour since he suffered head injuries between the ages of seven and eight, according to his grandfather.

According to Chinese mental health law, those diagnosed with mental diseases are subject to compulsory medical treatment.

It is irresponsible to release a juvenile into society just days after he brutally murdered his own mother, said thepaper.cn’s commentary.

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Beijing offers to cut auto tariffs, buy soy: US Commerce Secretary

WASHINGTON (AFP) – China has agreed to cut tariffs on autos imported from the United States and resume soybean purchases, Commerce Secretary Wilbur Ross said on Wednesday (Dec 12), confirming the reports that delighted investors.

Mr Ross told CNBC the moves by Beijing will “prove that President (Donald) Trump was right when he announced his summary of the talks” held recently with China’s President Xi Jinping.

The leaders met on the sidelines of the Group of 20 summit in Buenos Aires on Dec 1 and agreed to a 90-day truce while they tried to find a solution to the escalating trade dispute, but they provided differing accounts of the scope of their agreement.

Mr Ross did not say when the Chinese auto tariffs will come down or whether Washington had made any offer in exchange, nor when soybean exports might resume.

China raised duties on US autos to 40 per cent from 15 per cent as the confrontation between the world’s two largest economies heated up earlier this year, and essentially halted massive soy purchases.

American farmers, especially soybean farmers, have been hit hard by China’s retaliatory tariffs.

Senior US and Chinese officials held discussions by telephone Monday night. Media reports said China agreed to reduce the auto tariffs.

Mr Ross said Beijing’s offer would help German auto manufacturers in particular as they produced vehicles for the Chinese market at US auto plants.

“So that’s a very direct help to us and probably will be helpful in the talks we’ve been having with the German auto manufacturers,” he said.

Noting that the differing announcements following the Buenos Aires meeting, Mr Ross said, “The President had said there would be a relatively immediate resumption of soybean purchases. It now turns out that he’s accurate.”

The Wall Street Journal reported Wednesday that Chinese officials also agreed to replace the comprehensive industrial policy, Made in China 2025, which Trump officials have sharply criticised. The report said the new plan would allow foreign companies greater access to the Chinese market.

Word of possible progress in the trade talks has cheered Wall Street since this week, helping stocks recoup the prior week’s losses.

However, Beijing has expressed outrage at news last week that a senior executive from the telecoms giant Huawei had been arrested at Washington’s behest on charges of Iran sanctions violations.

The US had been poised to more than double the punitive tariffs on US$200 billion (S$274 billion) in Chinese goods at the start of next year, but with the truce in effect, that has been pushed back to March 1.

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Detained in China: Canadian businessman known for ties to North Korean leader

SEOUL/OTTOWA (REUTERS) – Canadian Michael Spavor has jet skied with Kim Jong Un, felt the ground shake from a North Korean nuclear test, and now it appears, been detained by Chinese authorities.

Spavor, a business consultant with deep ties to North Korea, is being investigated on suspicion of endangering state security, Chinese state media reported. The Canadian government says it has been unable to contact him and phone calls, messages and e-mails to Spavor went unanswered on Thursday (Dec 13).

When North Korean leader Kim launched a bid to engage the world and attract international investment this year, Spavor was uniquely positioned to play a role.

As one of the few Westerners with personal ties to the North Korea government and Kim himself, Spavor has been trying to drum up international interest in investing in North Korean economic projects, in anticipation of sanctions being eased amid warming ties.

Spavor is best known in the region for his relationship with Kim Jong Un, and his role in facilitating a visit to Pyongyang by American basketball star Dennis Rodman in 2013.

“That was the most amazing experience I’ve had in my life .. We hung out for three days,” Spavor told Reuters in a 2017 interview.

Images from that time show Spavor sharing cocktails with Kim on board one of his private boats, after they had been jet-skiing in the bay next to Wonsan, one of Kim’s pet economic development areas.

In 2015, Spavor was involved in efforts to attract more than US$150 million (S$205.5 million) in foreign funds for Wonsan, including US$39 million to fund a new brewery.

SPECIAL ACCESS

The investigation into Spavor follows the detention in Beijing on Monday of former Canadian diplomat Michael Kovrig, who Chinese state media report is being investigated on the same charges.

China has reacted angrily to Canada’s arrest on Dec 1 of Chinese executive Meng Wanzhou, the chief financial officer of China’s Huawei Technologies, and Spavor’s investigation is likely to further escalate the diplomatic row.

Now based in the border city of Dandong in China, Spavor has been cultivating ties between potential Chinese investors and North Korean officials.

Spavor’s experience with North Korea dates to at least 2001. In 2005, he lived in Pyongyang for several months teaching at a school run by a Canadian non-governmental organisation, according to the website for his organisation, Paektu Cultural Exchange.

Since then he’s mastered the Korean language – with a distinctly North Korean accent – and maintained regular contact with many people in North Korea, including Kim Jong Un.

Spavor’s contacts in the isolated and tightly controlled nation have allowed him access when other outsiders were blocked.

In February, North Korea barred most foreign media from covering a large military parade in downtown Pyongyang. Spavor was front and centre in the parade area, streaming online video of tanks rolling by as North Koreans celebrated.

Gregarious and affable, Spavor is a fixture in the small community of North Korea watchers, with analysts and journalists often seeking his rare insight into the country.

Spavor keeps a number of photos of his meetings with Kim on his phone, and describes the North Korean leader as charismatic and smart.

But Spavor also is discrete about his contacts with the controversial regime, declining to comment on politics and noting that his work focuses on cultural and business ties.

“For me, encouraging these sports engagement events, these nonpolitical friendship interactions, promoting these kind of events can show people that Americans and Koreans can get along very well,” he said in the 2017 interview. “I guess if we can continue to increase these exchanges, then we hope that has an effect on politicians too.”

SANCTIONS

But North Korea’s weapons programmes in defiance of UN resolutions and dismal human rights reputation has always been a lingering presence.

In September 2017, Spavor was among those in the Chinese border city of Yanji who said they felt the jolt from North Korea’s sixth and most powerful nuclear test.

Spavor told Reuters at the time he was eating brunch when he felt the building shake for about five seconds, before the city’s air raid sirens sounded.

Ahead of a major publicity push by North Korea around its foundation day events in early September, Spavor told Reuters he was taking dozens of Chinese investors and entrepreneurs into North Korea to “attend matchmaking sessions with various government officials and stakeholders as well as visiting existing and future development zones”.

There have been some signs that enforcement of sanctions has eased amid diplomatic outreach, but Washington has said sanctions will remain in force until more progress is made toward denuclearising North Korea.

When asked about the sanctions in September, Spavor said his clients “are aware of the current sanctions and are waiting for potential investment projects and other business for when the Chinese government gives the green light on business as usual”.

In his latest posts on social media on Monday, Spavor said he was on his way to the South Korean capital of Seoul for new consulting work and meetings with friends.

His friends say he never arrived.

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Canadian detained in China as Huawei CFO returns to court

VANCOUVER/BEIJING (REUTERS) – Canada confirmed on Tuesday (Dec 11) that one of its citizens was detained in China but said it saw no explicit connection to the arrest in Vancouver of a top executive at Chinese telecoms giant Huawei Technologies. 

Confirmation of the detention came soon after the executive, Huawei CFO Meng Wanzhou, returned to a packed Vancouver courtroom for a bail hearing in a case that has angered Beijing. 

Canadian analysts had predicted China would retaliate after Meng’s arrest last week at the request of US authorities. 

Meng, 46, faces US accusations that she misled multinational banks about Huawei’s control of a company operating in Iran, putting the banks at risk of violating US sanctions and incurring severe penalties, court documents said. 

Saying he was “deeply concerned,” Public Safety Minister Ralph Goodale confirmed that Canada was aware a Canadian citizen was detained in China, but he provided no details on who it was. 

Goodale said there was “no explicit indication at this moment” that the Canadian’s detention was linked to the arrest of Huawei’s CFO. Canadian officials have relayed their concerns to Chinese authorities about the detention. 

The Canadian foreign ministry issued a statement saying the government “is seized with this case”. A source directly familiar with the matter said this language was unusual for consular cases and showed a high level of concern. 

Former Canadian diplomat Michael Kovrig was the person detained, two sources had said earlier. Kovrig works for the International Crisis Group, an independent conflict resolution think-tank which said it was seeking his prompt and safe release. 

China has threatened severe consequences unless Canada releases Meng immediately. Canadian Prime Minister Justin Trudeau says the matter is one for the courts to decide. 

China’s Foreign Ministry and Ministry of Public Security did not respond immediately to questions regarding Kovrig’s detention sent via fax. 

Tuesday is the third day of bail hearings in a British Columbia court, where a judge will weigh final issues in determining whether Meng should be freed on bail while awaiting extradition proceedings. 

Canadian businesses operating in China are starting to feel the chill, and the signing of one major deal has been postponed, a source said. 

“The consequences have already begun,” the source said, noting that a Canadian firm had been due to ink a major agreement in the next few weeks. 

“The local partner, a Chinese private-sector actor, has told the Canadian partner that now is not a good time to sign,” said the source, who asked to remain anonymous. 

BEIJING WARNS ON ‘BULLYING’

Speaking at a Beijing forum on Tuesday, the Chinese government’s top diplomat, State Councillor Wang Yi, said the government kept constant watch on the safety of citizens abroad, though he did not specifically mention Meng’s case. 

“For any bullying that wantonly violates the legitimate rights and interests of Chinese citizens, China will never sit idly by,” state television quoted him as saying. 

The Canadian provincial court judge on Monday rolled the proceedings over to Tuesday because he wanted to hear more about who would take responsibility for Meng’s actions if she were released.  Meng’s lawyer David Martin had offered her husband as surety, but the judge and the public prosecutor questioned whether he could perform this duty as he is not a resident of British Columbia. 

The arrest has roiled markets over fears it will exacerbate tensions between the United States and China in trade negotiations that both sides have agreed must be concluded by March 1. 

In June 2014, Chinese businessman Su Bin was picked up on a US warrant in Canada, where he had been attempting to establish residency.  Shortly afterward a Canadian citizen in China was arrested and charged with spying. Kevin Garratt spent two years in detention before being deported. 

Huawei is the world’s largest supplier of telecommunications network equipment and second-biggest maker of smartphones, with revenue of about US$92 billion (S$126 billion) last year.

Unlike other big Chinese technology firms, it does much of its business overseas.  Huawei and its lawyers have said the company operates in strict compliance with applicable laws.

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China indicates former Canadian diplomat could have broken foreign NGO law

SHANGHAI – China said a former Canadian diplomat detained in Beijing is working for an organisation that is not legally registered and he may have broken China’s foreign non-governmental organisation (NGO) law.

Mr Michael Kovrig, a North-east Asia senior adviser with the International Crisis Group (ICG), a Brussels-based non-governmental organisation, was arrested in Beijing on Monday (Dec 10) night, said a statement by his current employer.

His detention comes days after Huawei’s top executive Meng Wanzhou was arrested in Vancouver at the request of United States authorities who have accused her of violating US sanctions against Iran. Shortly after she was arrested, China summoned the Canadian ambassador to demand that she be released, warning of “grave consequences”.

When asked if Mr Kovrig’s arrest was in retaliation, Chinese foreign ministry spokesman Lu Kang said on Wednesday (Dec 12): “If there is indeed such a case, please rest assured that the relevant Chinese authorities will certainly handle it according to the law.”

He maintained that China has “no information to provide” on this matter.

But he added that as far as he is aware, the ICG is not legally registered in China and if Mr Kovrig was carrying out “relevant activities” for the ICG within Chinese borders he would have broken the law.

The spokesman told reporters in a regular briefing that China has an “open policy” and foreign organisations as well as foreigners should not be worried.

“We maintain normal contacts with people from all walks of life in other countries. There are many tourists coming to China every year. Why are they not worried? All foreigners have nothing to worry about as long as they comply with Chinese laws and regulations,” he added.

The ICG said on Wednesday that it had received no information from Chinese officials about the detention and it was seeking consular access to Mr Kovrig.

Mr Kovrig’s arrest was confirmed by Canadian Prime Minister Justin Trudeau who said he was aware of the situation.

“We have been in direct contact with the Chinese diplomats and representatives,” Mr Trudeau told reporters in Ottawa.

“We are engaged in a file which we take very seriously and we are of course providing consular assistance to the family,” he added.

Before joining the ICG in early 2017, Mr Kovrig had served in Beijing and Hong Kong for Canada’s foreign service.

President and chief executive of the ICG, Mr Robert Malley, told The New York Times that he was sure Mr Kovrig did not “engage in illegal activities”.

“He was not endangering Chinese national security. He was doing what all Crisis Group analysts do: objective and impartial research and policy recommendations to end deadly conflict,” said Mr Malley.

According to Mr Kovrig’s LinkedIn profile, his work with the international organisation involves research related to China, Japan, the Korean Peninsula and South-east Asia. It says he aims to help “reduce tensions and promote the peaceful resolution of disputes” by “constructive engagement with all parties”.

Several former Canadian ambassadors to China told the media that they believed Mr Kovrig’s case was linked to Ms Meng’s arrest.

The chief financial officer of Huawei, a Chinese telecoms giant, is accused of personally being involved in tricking banks into violating US sanctions. She has been granted bail of C$10 million ($10.3m) and could face charges if extradited to the US.

An expert on Chinese law at Georgetown Law School told The Straits Times that “it’s highly likely that Michael Kovrig was detained in order to send a message to the Canadian government”.

“Beijing is signalling that they are watching Canada’s actions in the Meng case very closely,” said Mr Thomas Kellogg, executive director of the Center for Asian Law at Georgetown Law School.

Mr Kovrig’s diplomatic background could be seen as a “net positive” such that his “detention sends an even clearer message to Ottawa”, said Mr Kellogg.

While hard to speculate what could happen next, Mr Kellogg said the Chinese authorities could release Mr Kovrig having made their point about Canada’s vulnerability to retaliation.

“Or they could hold on to him for the time being, as they wait to see whether Canada agrees to send Ms Meng to the US,” Mr Kellogg added.

“Beijing certainly should release him, immediately and unconditionally, if they have no evidence of criminal wrongdoing.

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Former Canadian diplomat Michael Kovrig detained in China: Sources

SHANGHAI/BEIJING (REUTERS) – A former Canadian diplomat has been detained in China, two sources said on Tuesday (Dec 11), and his current employer, the International Crisis Group, said it was seeking his prompt and safe release.

Michael Kovrig’s detention comes after police in Canada arrested the chief financial officer of China’s Huawei Technologies Co Ltd on Dec 1 at the request of US authorities, a move that has infuriated Beijing.

It was not immediately clear if the cases were related, but the arrest of Huawei CFO Meng Wanzhou in Vancouver has stoked fears of reprisals against the foreign business community in China.

“International Crisis Group is aware of reports that its North East Asia Senior Adviser, Michael Kovrig, has been detained in China,” the think-tank said in a statement.

“We are doing everything possible to secure additional information on Michael’s whereabouts as well as his prompt and safe release,” it added.

China’s Foreign Ministry and Ministry of Public Security did not respond immediately to questions faxed about Kovrig’s detention.

The exact reason for the detention, which was made sometime early this week, according to the sources, was not immediately clear.

The Canadian embassy declined to comment, referring queries to Ottawa.

Calls to Kovrig’s phones were not answered.

DIPLOMATIC SPAT

Kovrig, a Mandarin speaker, has been working as a full-time expert for the International Crisis Group since February 2017.

From 2003 to 2016, he worked as a diplomat with stints in Beijing and Hong Kong, among others, according to his profile on LinkedIn.

Following Meng’s arrest, China on Saturday summoned Canada’s ambassador in Beijing and warned of severe “consequences” if Ottawa did not see that she was immediately released.

Meng is set to return to a Vancouver courtroom on Tuesday, as the judge weighs final issues in determining whether she should be freed on bail while awaiting proceedings for her possible extradition to the United States.

Washington has made accusations that Meng misled multinational banks about Huawei’s control of a company operating in Iran, putting the banks at risk of violating US sanctions and incurring severe penalties.

Locked in a bitter trade war, Washington and Beijing earlier this month agreed to delay a planned Jan 1 increase in US tariffs to 25 per cent from 10 per cent on US$200 billion (S$274 billion) worth of Chinese goods, allowing more time to negotiate over China’s huge bilateral trade surplus and US complaints that it steals technology.

Chinese experts have said that Beijing was trying to separate Meng’s arrest from the trade negotiations, but also warned that public anger in China over Canada’s move could compel officials there to take measures that would further sour US-China ties and endanger talks.

In 2014, a Canadian couple, Kevin and Julia Garratt, were detained a week after Canada accused China of hacking into the national computer system. Kevin Garratt was charged with spying, but released and deported after he spent two years in detention.

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Canadian court weighs bail for jailed CFO of China's Huawei

VANCOUVER (Reuters) – A Canadian provincial court weighing whether to grant bail to a top executive of Chinese telecoms giant Huawei Technologies [HWT.UL], who is facing possible extradition to the United States, adjourned on Monday without deciding her fate.

U.S. prosecutors want Chief Financial Officer Meng Wanzhou to be extradited to face accusations she misled multinational banks about Huawei’s control of a company operating in Iran, putting the banks at risk of violating U.S. sanctions which would incur severe penalties, court documents said.

Meng, the 46-year-old daughter of Huawei’s founder, was arrested on Dec. 1 as she was changing planes in Vancouver. In a sworn affidavit, she said she is innocent and will contest the allegations against her at trial if she is surrendered to the United States.

The judge in Monday’s bail hearing said he rolled the proceedings over to Tuesday at 10 a.m. PST (1 p.m. EDT/1800 GMT) because he wants to hear more about the issue of surety – who will take responsibility for Meng’s actions if she is released.

Meng’s lawyer David Martin, who told the court high-tech surveillance devices and a 24-hour security detail would ensure his client does not flee and proposed a C$15 million ($11.3 million) bail guarantee, had offered her husband as surety.

But the judge and the public prosecutor called into question whether Meng’s husband could perform this duty as he is not a resident of British Columbia, where Vancouver is located, and would not suffer if she were to breach her bail conditions.

Meng’s arrest has roiled markets over fears it would exacerbate tensions between the United States and China, already at a high over tariffs. The two sides have agreed to trade negotiations that must be concluded by March 1.

Beijing has demanded Meng’s immediate release and threatened “consequences” for Canada. But both Chinese and U.S. officials appear to be avoiding linking her arrest to the trade dispute.

Meng’s lawyer offered C$14 million in property equity and C$1 million in cash as a guarantee. The public prosecutor said he wanted half in cash and half in property.

At one point the judge asked why Meng had avoided travel to the United States since 2017 if not to avoid arrest. Martin cited a “hostile” climate toward Huawei in the United States.

“I ask the court to ask itself, what motive could she possibly have to flee?” Martin said, arguing the evidence against her was not overwhelming.

“If she were to flee, or breach order in any way … it doesn’t overstate things to say she would embarrass China itself.”

Meng appeared confident in court early on Monday, smiling and taking her lawyer’s arm. But by mid-afternoon she appeared more tense, gesturing rapidly as she conferred with members of her legal team.

She has argued she needs to be released because she has severe hypertension and fears for her health.

Huawei is the world’s largest supplier of telecommunications network equipment and second-biggest maker of smartphones, with revenue of about $92 billion last year. Unlike other big Chinese technology firms, it does much of its business overseas.

U.S. officials allege Huawei was trying to use the banks to move money out of Iran. Companies are barred from using the U.S. financial system to funnel goods and services to sanctioned entities.

Huawei and its lawyers have said the company operates in strict compliance with applicable laws, regulations and sanctions of the United States and other parties.

“We will continue to follow the bail hearing tomorrow. We have every confidence that the Canadian and U.S. legal systems will reach a just conclusion,” the company said on Monday.

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