Chinese tech mogul arrested in Canada

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The Globe and Mail newspaper, citing law enforcement sources, said she is suspected of trying to evade United States trade curbs on Iran. Stocks of most major chip manufacturers fell after news of the arrest broke, with chipmaker stocks usually serving as a bellwether for investor confidence in U.S. Hong Kong's Hang Seng lost 2.5 percent and the DAX in Germany sank 1.8 percent.

"People are just as anxious about further adjustments in the U.S. stock market, the inverted yield curve and a slowing economy there", he said. The yield on the 10-year Treasury note fell to 2.86 percent from 2.92 percent on Tuesday, a large move.

Further investigation by Reuters found financial and other links over a decade between Huawei, Meng, and Skycom. Huawei has repeatedly insisted Beijing has no influence over it. Trump and Xi had dined in Argentina on December 1 at the G20 summit.

The South China Morning Post said that Ms Meng has spoken to Huawei staff in a recent internal briefing on regulatory compliance.

She was arrested while changing flights on Saturday.

"We have made solemn representations to Canada and the United States, demanding that both parties immediately clarify the reasons for the detention, and immediately release the detainee to protect the person's legal rights", ministry spokesman Geng Shuang told a regular press briefing.

"She was in transit though Vancouver".

China says it "firmly opposes and strongly protests" the arrest of Meng and calls for her immediate release.

The US Justice Department probe is being run out of the US attorney's office in Brooklyn, the sources said. A spokesman for the US attorney's office in Brooklyn also declined to comment. "The Chinese government should seriously mull over the USA tendency to abuse legal procedures to suppress China's high-tech enterprises".

"I believe that China's government will use maximum force to fight for freedom and justice for Meng Wanzhou".

The arrest comes at a delicate time, as Washington and Beijing are set to negotiate a deal that could diffuse longstanding grievances over trade between the two countries.

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"You can play hardball with a small country but you can't do it with the USA", he said.

David Mulroney, a former Canadian ambassador to China, said USA and Canadian business executives could face reprisals in China.

"We'll see more cases like this over the next three months, sanctioning China's state-owned enterprises and individuals, to boost momentum on the USA side", Liu said.

However, the topic ranked only 31st among trending items on Weibo as of Thursday afternoon, with many discussion threads apparently blocked, which is not unusual on China's heavily censored Internet.

Meng's arrest also threatened to inflame disagreements over Iran and Trump's decision to break with other governments and re-impose sanctions over the country's nuclear development. "The US has identified that China has found a backdoor to enter the US market through venture capitalists and private investors but those are also now shutting down gradually".

He added that the U.S. has had "enormous concerns for years about the [.] practice of Chinese firms to use stolen American intellectual property, to engage in forced technology transfers, and to be used as arms of the Chinese government's objectives in terms of information technology in particular". 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.

In a statement, it said it had complied with "all applicable laws and regulations where it operates, including applicable export control and sanction laws and regulations of the UN, US and EU".

While another Chinese tech company, ZTE, fell foul of the USA sanction regime, "no arrest was made back then", Yip added, reflecting the seriousness of the Huawei saga.

Huawei is one of the world's largest telecommunications equipment and services providers. Huawei suppliers AAC Technologies (AACAY) and Sunny Optical (SNPTF) both plunged around 6%.

Meng's arrest drew a quick reaction in Washington. "The incident could turn out to be a breaking point", Zhu said.