M’LEARNED FRIENDS at China Law Blog have posted a rather salutary guide to hostage-taking in China — how to avoid it befalling you, not a how to do it guide, we should rapidly add.
Hostage-taking is far more common in China than is often realised, and in some cases, legal. China’s laws, judiciary and police make it easy to find pretexts for taking foreign nationals hostage.
It is a persistent threat for foreigners working in the country, which has added to the reasons that multinationals doing business in China have been pulling out foreign employees over the past year.
One of the prompts for the post is, self-evidently, the case of ‘the two Michaels’ — Michael Spavor and Michael Kovrig, the Canadians detained by Chinese authorities shortly after Huawei’s CFO Meng Wanzhou was arrested in Canada nearly three years ago on a US extradition request. They were released soon after she was on Friday following her deferred prosecution agreement with the US Department of Justice that will wipe away the fraud charges against her.
To this Bystander, the money sentence is:
China released the two Michaels literally within hours of Meng walking free, and it did so to let the world know that it did use the arrest of the two Michaels as hostage diplomacy and, even more importantly, to threaten the world that it would not hesitate to engage in hostage diplomacy again.
The main takeaway from the two Michaels example is that diplomatic hostage taking works as a political tool, not least because authorities are not overly concerned about any international ill will China earns from such behaviour.
CHINA’S POSITION ON the return of Huawei’s CFO Meng Wanzhou after nearly three year’s detention in Canada fighting an extradition request to face criminal fraud charges in the United States is clear: it has won a complete victory.
US Department of Justice prosecutors announced a deferred prosecution agreement on Friday under which Meng admitted misleading HSBC into processing transactions for Huawei that breached sanctions against Iran. In return, her prosecution on bank and wire fraud charges, to which she pleads not guilty, halts and the charges will be formally dropped by the end of next year if she complies with the agreement.
The extradition request against her thus became moot and was withdrawn. Meng was immediately released by the Canadians and boarded a plane chartered by the Chinese government to take her home to Shenzhen, posting to WeChat en route:
I am currently flying over the North Pole, heading in the direction of home, soon to enter the embrace of our great motherland. Under the leadership of the Chinese Communist party, our motherland is heading toward prosperity. If it was not for our strong motherland, we would not have the freedoms of today.
She did not mention what the one senior FBI official described as her admission as ‘evidence of a consistent pattern of deception to violate US law.’ All search results on Weibo relating to her admission of misleading HSBC are reportedly being blocked.
Foreign Ministry spokesperson Hua Chunying said:
Facts have proven that it is a political persecution case targeting a Chinese national with the aim of suppressing Chinese high-tech companies…The so-called fraud charges against Meng are nothing but pure fabrication…What the United States and Canada have done is a typical case of arbitrary detention.
It is the mirror image of the view Canadians will have of the detention of ‘the two Michaels‘, two Canadian nationals detained in China on espionage charges shortly after Meng’s arrest in Canada and released soon after her release on Friday.
Michael Spavor, who ran cultural exchanges with North Korea, was jailed for 11 years in August after being found guilty. The case of Michael Kovrig, a former diplomat, was still before the courts.
Throughout, authorities have maintained that the two cases were not connected with Meng’s while occasionally linking the two indirectly. However, the two Canadians were widely regarded in the West as diplomatic hostages in the Meng case.
While Canada has got its two citizens returned home, it is more difficult to see what the United States has gained. The US Department of Justices has published the deferred prosecution agreement, but there may be more unreleased detail concerning it to come out or even a secret side-deal.
We do know from reading the agreement that the deal requires Meng to refrain from saying anything that contradicts US prosecutors’ stated facts about the case, which are laid out in a four-page appendix to the agreement. This in a nutshell says that in a 2013 presentation to ‘financial institution 1’, Meng misrepresented the relationship between Huawei and Skycom, which operated in Iran, as a business partnership when in fact Huawei controlled Skycom. This caused the bank to provide banking services, that broke US sanctions against Iran.
However, any hopes that Meng’s release will ease strained US-China tensions to any significant degree appear optimistic.
True, Meng’s case was a particular and personalised irritant in bilateral relations because she was the daughter of Huawei’s founder Ren Zhengfei. Nonetheless, a larger US racketeering indictment against Huawei will continue, bolstered by Meng’s admissions in the agreement.
The company says it will defend itself against vigorously, and US-China relations remain fraught, the more so, the more triumphant the reaction in China to Meng’s return.
In that light and at this point pending the revelation of more quid pro quos, the outcome to Meng’s case seems a big win for China, a moderate success for Canada and not much of anything at all for the United States. However, we suspect the other half of the story is still to be told.
THE CASES OF Robert Schellenberg, a convicted Canadian facing the death penalty in China, and Meng Wanzhou, Huawei’s chief financial officer facing extradition from Canada, have no legal connection beyond timing.
In November 2018, Schellenberg was sentenced to 15 years in jail, having been convicted of planning in 2014 to smuggle a large quantity of methamphetamine to Australia, a charge to which he pleaded not guilty.
The following January, after a one-day retrial ordered after he appealed the sentence, the Dalian Intermediate People’s Court ruled the original sentence was too lenient and imposed the death penalty.
This occurred shortly after police in Canada detained Meng while changing flights in Vancouver in response to an extradition warrant from the United States, where she is wanted on fraud charges.
Nine days after Meng’s detention, two other Canadian citizens, Michael Spavor, a businessman, and Michael Kovrig, a former diplomat, were arrested by authorities on espionage charges.
The two men were tried days apart in March; Spavor in Dandong and Kovrig in Beijing. No verdicts or sentences were announced after either hearing. Both were closed to Canadian diplomats on the grounds that trials involving state secrets are not open to the public.
Canadian officials expect at least one sentence, most likely Spavor’s, to be announced imminently. (Update: Spavor has been sentenced to 11 years in prison.) On August 10, a court in Shenyang denied Schellenberg’s appeal against the death sentence. He has one legal recourse left, an appeal to China’s Supreme Court.
The timing is pertinent. Meng’s appeal against her extradition is due to conclude on August 20.
It is difficult not to conclude that Beijing is exploiting the Canadians’ cases to put pressure on Canada. Canadian officials have called it hostage diplomacy.
Beijing denies any political connection, as would be expected: the judicial system is taking its natural course with three defendants facing serious charges.
The independence of the Canadian judiciary should insulate it from political pressure from Ottowa, should the Trudeau government choose to exert it. Doubling the jeopardy for Canadian Prime Minister Justin Trudeau, he likely faces a general election later this year. The cases are already a pre-campaign campaign issue in Canada.
However, even if Canada is steadfast in not releasing Meng as Beijing wants, or, even less likely, the Biden administration drops its extradition warrant for Meng, the potential arrest of foreign nationals may have a chilling effect on the Canadian or other governments in future. China’s legal system makes it straightforward for authorities to find pretexts for taking foreign nationals hostage.
TO LITTLE SURPRISE in these febrile times for China-US relations, US Secretary of State Mike Pompeo has declared that Hong Kong has lost its autonomy from China, and thus put at risk the city’s preferential trade treatment by the United States.
Last year, the US Congress passed legislation that requires the US State Department to certify annually that the city remains autonomous. In a statement, Pompeo said:
After careful study of developments over the reporting period, I certified to Congress today that Hong Kong does not continue to warrant treatment under United States laws in the same manner as US laws were applied to Hong Kong before July 1997. No reasonable person can assert today that Hong Kong maintains a high degree of autonomy from China, given facts on the ground.
The statement comes hard on the heels of Beijing’s announced intention to write a new national security law into Hong Kong’s Basic Law, an intent that has brought hundreds of Hongkonger’s onto the streets in protest. There, they have been met with tear gas, pepper spray and police baton charges.
The State Department announcement paves the way for a range of punitive options for the Trump administration, from asset freezes and travel restrictions for top officials to US President Donald Trump’s favoured sanction of tariffs on Hong Kong exports. The president has promised an indication by week’s end of what he will do.
Foreign ministry spokesman Zhao Lijian has repeated the standard line that the national security law for Hong Kong is an internal affair for which it will brook no foreign interference, and warned that “if anyone insists on harming China’s interests, China is determined to take all necessary countermeasures”.
As this Bystander has noted previously, commerce and capital are going to have to choose sides over Hong Kong.
Meanwhile, the British Colombia Supreme Court in Vancouver has ruled that an extradition request by Washington for Meng Wanzhou, Huawei Technologies’ chief financial officer and the daughter of the company’s founder, can proceed. Meng faces fraud charges in the United States in connection with alleged violations of US sanctions against Iran.
This is far from the end of the matter. A hearing is scheduled for next month on whether Canadian officials acted lawfully while arresting Meng. Even if a Canadian court eventually recommends extradition, which has already cast a dark shadow over relations between Beijing and Ottawa, it will be Canada’s federal justice minister who will take the ultimate decision whether or not to hand Meng over for trial in the United States.
Update: On May 28, the National People’s Congress formally approved the proposal for Beijing to impose a national security law on Hong Kong,
THE UNITED KINGDOM’S renowned ability to muddle through the middle is being put to the test. The Johnson government’s decision to allow Huawei a continuing role in developing the United Kingdom’s 5G networks is a case in point.
Beijing threatened repercussions on China’s trade and investment with the United Kingdom if Huawei was excluded. Washington threatened to cut off intelligence sharing with London if it was not.
The Trump administration is pursuing a global campaign against the telecoms giant which it accuses of spying for China, a charge the company denies. That campaign is a pivotal battle of the Trump administration’s technology war with China.
With Brexit barely hours away and the United Kingdom needing future trading relationships with both of the world’s two largest economies, wiggling along the fence bottom down and damn the splinters was Prime Minister Boris Johnson’s only option. It is a discomfort that will be familiar to US allies that are China’s regional neighbours.
Hence the Shenzhen-based telecoms giant will be allowed up to a 35% share of the UK 5G network’s periphery, i.e., the radio access network, but be banned from the most sensitive part, the core, and excluded altogether from areas near military bases and nuclear sites.
The 35% cap also applies to the rollout of the UK’s fibre broadband network, for which Huawei already has a 45% share. Similarly, the company currently exceeds the 35% cap in two of the three of the four UK mobile networks that deploy Huawei kit.
The government’s decision still needs the UK parliament’s approval. Voices in Washington are urging backbench MPs to oppose it for the sake of preserving the special relationship between the United Kingdom and the United States. They will also argue, correctly, that the core and the periphery of 5G networks are converging, so even periphery access now is a (not so) long-term security threat.
The Trump administration already regards the United Kingdom as an unreliable ally for moves such as joining Beijing’s Belt and Road-linked Asia Infrastructure Investment Bank against Washington’s wishes and for generally being more accommodating to China than it likes — although the Trump administration’s default view is that any ally that does not fall entirely in line with its wishes is unreliable. As the president had made calls to Johnson ahead of the Huawei decision, his next reaction is reliably likely to be petulant.
While the 5G decision will be as irritating to China as it is the United States, for Huawei, the win, in so far as it is not a defeat, comes as the Trump administration is seeking to bolster its barriers against the company gaining access to US technology. Washington has leaned heavily on its allies, although only with any success with Australia, New Zealand and to an extent Japan. European nations and the EU, bracing for a trade assault from the Trump administration, have been less accommodating.
Commerce Secretary Wilbur Ross says tighter restrictions are coming Huawei’s way. However, US reports have said that a proposal to further restrict US companies from selling computer chips and other components to the company, including for the first time via their overseas subsidiaries, has been delayed.
The defence establishment is concerned that the move would accelerate China’s drive to develop indigenous technology. At the same time, the lost sales by US firms could cut into their research and development spending, at the risk of blunting US military technological superiority.
On another front, court proceedings are underway in Canada to have Meng Wanzhou, Huawei’s chief financial officer and daughter of its founder, extradited to the United States to stand trial on fraud charges connected to alleged busting of sanctions on Iran. Meng denies the allegations, and the case could take years to resolve.
Prosecutors say Meng’s case is separate from the broader trade dispute between the United States and China. However, the inverse is true. The trade dispute is only a part of the more existential confrontation between Washington and Beijing for technological leadership in which the United Kingdom finds itself uncomfortably caught in the middle.
ANY FLEETING GOODWILL between Beijing and Washington generated by the signing of the phase one economic and trade agreement earlier this week is likely to evaporate early next week when a court in Vancouver opens an extradition hearing for Huawei’s chief financial officer Meng Wanzhou.
The United States wants to bring her to stand trial on charges of bank fraud in connection with allegations that she lied to HSBC about her company’s operations in Iran. Meng denies the allegation and is fighting the extradition attempt.
US Treasury Secretary Steven Mnuchin was at pains this week to underline how the Trump administration wanted to separate its trade and what he called national security issues with China. However, the message from President Xi Jinping read out at the signing ceremony calling for fair treatment for Chinese companies suggests that Beijing sees them of a piece.
There is little sign of the US campaign against the telecoms giant easing off. If anything, it is ramping up the pressure on allies to exclude Huawei from their 5G networks and is reportedly considering tighter restrictions on what US companies can sell to the firm.
PARAPHRASING OSCAR WILDE, to lose one citizen may be regarded as a misfortune; to lose two looks like political retaliation.
China detained two Canadian citizens following the arrest of Huawei’s chief financial officer, Meng Wanzhou, in Canada at the request of the United States, which has charged her with fraud in connections with alleged violations of US sanctions against Iran (charges the company says are baseless).
The two Canadians will be charged with undermining China’s national security.
One is a think tank researcher, and the other runs a cultural association. The work of both concerns North Korea, which would have meant they would already have been under the observation of Chinese authorities as well as making accusations of their being spies plausible.
Beijing’s fast and furious response to Meng’s arrest will reinforce perceptions in the West that Huawei and the Chinese government work hand in glove, just as in China, Meng’s arrest confirms suspicions that the West is out to kill Huawei.
US President Donald Trump has tweeted that he will intervene in Meng’s case — presumably by ordering the US Department of Justice to drop the case — if he believes it will sabotage the trade deal he is working on with President Xi Jinping. Trump has been bigging up both the scale of the deal —“the largest trade deal ever made” — and its imminence.
China’s resumption of soybean purchases from US farmers and announced the lowering of tariffs on US car imports from 40% to the 15% charged on cars imported from elsewhere suggests a deal of some sorts in the making.
It would be to Beijing’s advantage if the conflict with the United States returned to compartmentalised confrontation, rather than advance towards the so-called ‘whole government’ cold war.
But that would go against the fact that the Trump administration has been stepping up the pace of bringing US legal actions against Chinese entities and individuals for various alleged economic crimes from intellectual property violation to coerced technology transfers.
Those actions are in line with sentiment in the US Congress swinging behind the growing disenchantment in the United States, particularly among businesses, with engagement and a general strategic mistrust of China.
The uncertainties and variabilities of US policy remain; not just the Meng charges but also, for example, this week’s speech by US National Security Advisor John Bolton outlining the Trump administration’s policy towards Africa.
It was a speech remarkable for being as much if not more about China (and Russia) than it was about Africa, and a reminder that the China hawks in the Trump administration believe they are engaged in an existential struggle whereas their president is preoccupied with winning re-election in 2020.
Xi, too, has constraints. He needs to manage internal expectations as China’s economic growth slows while the economy fitfully rebalances. At the same time, the Trump administration’s stance towards China has perturbed the leadership and revived opportunity for critics of Xi’s centralisation of power.
That, more than anything, is why China-US relations will stay on two inconsistent tracks.