The Washington Post reports today: “An unnamed senior U.S. official with direct knowledge of the matter told The Washington Post last week that Trump learned of the arrest [of Huawei executive Meng Wanzhou] only after the meal had concluded and reacted with intense anger.” The Washington Post may not be the most reliable source on internal matters of the Trump administration, but the story rings true — and it is frightening. On Dec. 6, I conjectured in Asia Times that the president’s enemies set him up. It’s looking more and more like a Deep State operation against the president.
The United States took the utterly unprecedented step of arranging the arrest of a prominent Chinese national in another country, namely Canada, over sanctions violations, which until now have been addressed with economic penalties, and attempting to extradite the Chinese national to face criminal charges in the United States. And the person in question is the daughter of the founder of Huawei, one of China’s most prominent business leaders. Nobody told the president as he sat down to negotiate with Xi Jinping? That doesn’t wash.
National Security Adviser John Bolton earlier this week told National Public Radio that he knew of the arrest, which occurred the same day that President Trump dined with Chinese President Xi Jinping in Buenos Aires, and said he didn’t know whether the president knew:
All right. Did the president know in advance that this arrest was coming?
You know, I don’t know the answer to that. I knew in advance, but this is something that’s, that we get from the Justice Department and these kinds of things happen with some frequency. We certainly don’t inform the president on every one of them.
OK. So you knew at that dinner then over the weekend with China’s president that this arrest was taking place?
Well, you know, there are a lot of things that are pending in any given time. You don’t know exactly what’s going to happen in terms of a particular law enforcement action, that depends on a lot of other circumstances.
That is all the more astonishing considering that Bolton told NPR that the arrest was NOT simply a law enforcement matter, but directly related to our trade issues with China:
NPR: What is the message that is sent by the arrest of Meng Wanzhou?
National security adviser John Bolton: Well, I’d rather not get into the specifics of law enforcement matters but, but we’ve had enormous concern for years about … in this country about the practice of Chinese firms to use stolen American intellectual property to engage in forced technology transfers and to be used really as arms of the Chinese government’s objectives in terms of information technology in particular. So not respecting this particular arrest, but Huawei is one company we’ve been concerned about, there are others as well. I think this is going be a major subject of the negotiations that President Trump and President Xi Jinping agreed on in Buenos Aires.
This had been understood to involve Huawei ‘s dealings with Iran in some fashion. Are you saying that’s not correct?
Well, I think the violations of the Iran sanctions are certainly of major concern to the Trump administration. It’s one of his signature policies and I think that applies on a global basis. But with respect to a number of Chinese companies, we saw what happened with ZTE some months ago and many other issues of concern like that. And I think, as I say, as the negotiations proceed I think we’re gonna see a lot about what Chinese companies have done to steal intellectual property, to hack into the computer systems, not just of the U.S. government, although they’ve done that, but into private companies as well.
Earlier this year, the administration banned the sale of U.S. chips to Huawei’s competitor ZTE in retaliation for violation of Iran sanctions. Why not apply the same penalty to Huawei? The answer, I am informed, is that Huawei launched a crash program to make itself self-sufficient in the sophisticated chips that power its top-of-the-line handsets. Huawei designed its own Kirin chipset to compete with the Qualcomm chips that dominate the high-end handset market. With help from Taiwnese chip fabricators, Huawei can meet its own demands.
A number of my friends in the national security establishment cheered the arrest of Meng Wanzhou. Huawei is now the world’s largest telecommunications equipment manufacturer, and has positioned itself as market leader in 5G mobile broadband technology. 5G not only promises download speeds an order of magnitude faster than 4G LTE, but makes possible a vast number of new industrial controls (the so-called Internet of Things) that will define a great deal of technology for the next generation. I’m all for beating Huawei, but picking off individual executives isn’t going to put a bell on the dragon.
Huawei played rough and dirty for years, undercutting its competitors’ prices and grabbing market share. It’s an employee-owned company that doesn’t show its books to the public, but I presume that it had substantial government subsidies. Fifteen years ago Huawei was caught red-handed stealing CISCO’s computer code, bugs and all. Today, Huawei spends as much on R&D as Microsoft. It has thousands of European engineers working in its research centers in Europe, as well as an army of Chinese researchers. It’s dangerous not because it steals technology but because it develops its own technology.
If the U.S.-China trade war escalates — and Saturday’s arrest in Vancouver was an extreme form of escalation — the likeliest outcome is a global stock market crash and a world recession. The U.S. stock market signaled distress last week when the news emerged (and the market crash on Tuesday, prior to news reports of the arrest, probably occurred after word leaked out to a few major hedge funds). The world would be divided into U.S. and Chinese spheres of economic influence. The U.S. has enough pull to keep Huawei out of the Anglo-Saxon world and possibly Japan, but don’t expect the Western Europeans to play ball with us. Chinese broadband technology likely will dominate Eurasia from the South China Sea to the English Channel.
A recession before 2020 would make it hard if not impossible for President Trump to win a second term. Whoever authorized the Vancouver arrest is either incompetent or a saboteur. Failure to inform the president sounds more like sabotage. In either case, heads should roll.
I support President Trump and I want him to succeed. China is a rising behemoth that now invests more than we do, graduates four times as many STEM bachelor’s degrees and twice as many STEM doctorates than we do, and wants to dominate the high-tech future. If we want to beat China, I argued in this space last week, we need to do exactly what we did to beat Russia in the Cold War: Use the Defense Department research budget in partnerhsip with U.S. industry to leapfrog China in a key set of technologies. It won’t be easy, as the distinguished engineer and mathematician Edward Dougherty warns in a response to my article. We will require an overhaul of our education system, argues Prof. Dougherty, who is distinguished professor of engineering at Texas A&M University.
It won’t be easy, so we had better get started.