It hardly seems coincidence Huawei’s announcement, made in a rare press conference Thursday and live-streamed to Western countries, also overlaps with the US attempt to extradite Meng Wanzhou, the Huawei CFO and founder’s daughter, for alleged violations of sanctions against Iran.
It inevitably signals a further ratcheting up of the political tension between the US and Chinese authorities.
A vulnerable target
But official Chinese government retaliation and even rhetoric over the treatment of Huawei – including Meng’s arrest – have so far been less aimed at the US than at Canada. With China and the US trying to finalise a trade deal to avoid the imposition of higher US tariffs imposed by Trump, Xi Jinping seems reluctant to up the ante with such a formidable and erratic foe right now.
The Trudeau government in Canada, however, is far more vulnerable as a target after it responded to the US extradition request by arresting Meng while she was in transit in Vancouver in December. And China’s willingness to punish key Canadian exporters is also a sharp reminder to Australia of how directly political retaliation can translate in dollar terms.
Naturally, the Chinese are not stating this week’s decision to ban canola imports from the largest Canadian grain processor, Richardson International, has anything to do with the fracas over Huawei and Meng. But the ban was announced days after Canada said the US had presented enough evidence to proceed with an extradition hearing based on alleged violations of sanctions against Iran.
This legal fight playing out in the Canadian courts will no doubt be extremely protracted, with Meng now counter-suing the Trudeau government. Politically, it spells out to the Canadian government and voters this comes with an immediate economic cost – as well as leading to the tit-for-tat arrest of some Canadian citizens.
Canada is also about to make a decision on whether Huawei will be permitted to participate in the rollout of 5G, with US pressure on the Trudeau government to follow the Australian, New Zealand and US example of a complete ban on any involvement by the world’s largest telco equipment supplier.
The problems for the Winnipeg-based Richardson International had been simmering for several weeks, with reports of protracted delays with customs and import permits. That sounds very similar to the delays intermittently affecting a range of Australian exporters for no obvious reason. That includes the restrictions on coal exports to some Northern Chinese ports this year.
All Australian companies doing business there will still be hoping that they don’t face an escalation amounting to a full-scale ban on the import of their products.
Alarm among exporters
Canola is Canada’s most valuable agricultural export to China but is considerably less crucial to the Chinese economy than Australia’s high-quality iron ore and coal. The canola trade is also worth far less to Canada – only around $3 billion a year – although it is an important part of Canada’s agricultural economy, particularly in key provinces.
The Richardson case will still create alarm among Australian exporters, including of less valuable goods and services hoping to take advantage of the giant Chinese middle-class market for quality products. They appreciate how easily commercial operations can become collateral damage in any political showdowns.
That apprehension will be re-enforced by the warning of economic historian Niall Ferguson at The Australian Financial Review Business Summit this week that Australia will find it increasingly difficult to avoid making a choice between China and America. That is despite the potential economic cost to this country.
Plenty of Australian business leaders disagree with this analysis, arguing that Australia can still balance its interests between its most important trading partner and its security partner.
But the increase in the number of customs delays and other import restrictions while the Turnbull government was put into China’s diplomatic deep freeze last year is evidence of the commercial tensions that can flare. The relationship under Scott Morrison remains fragile.
China’s official rationale for the ban on Richardson was the supposed presence of weeds in the company’s recent shipments. Other Canadian grain businesses have not been targeted. The threat of greater action is still obvious enough.
Canada’s Foreign Minister, Chrystia Freeland, says she is very concerned by what has happened to Richardson, saying there is no scientific evidence for China’s ban. The Canadian Food Inspection Agency maintains the canola shipments met foreign import requirements.
Political requirements are far more onerous.
from Credence news https://credencenews.com/huawei-opens-another-front-in-the-us-china-tech-war/
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